JUDGMENT
Gowri Shankar, Member (T)
1. Appeals taken up for disposal after waiving deposit.
2. Two orders of the Commissioner impugned in these appeals dismissed the appeals filed before him by the appellant, for failure to deposit of the entire duty and penalty that was confirmed. The order of the Assistant Commissioner were passed in the following circumstances. The appellant manufactured steel pipes. It cleared most of these pipes for home consumption on payment of duty. It cleared some quantity without payment of duty to a buyer, who after subjecting the pipes to various processes, exported them. Clause (b) of Sub-rule (1) of Rule 13 provides that the Central Government may specify materials the removal of which may be permitted by the Commissioner without payment of duty for use in manufacture in bond of export goods. Notification 47/94 issued by the Central Government under this rule specifies all excisable goods and prescribed the procedure for this purpose. Rule 12 enables the government to grant rebate of duty paid on excisable goods or duty paid on material used int he manufacture of such goods which are exported.
3. The appellant had removed the goods in terms of notification 47/94. The notice alleged that the provisions of Rule 57CC would apply to the manufacturer as a result of such clearances. This rule, to the extent that we are concerned with it, provides that a manufacturer who utilises inputs on which modvat credit has been taken in the manufacture of excisable final products or final products cleared at nil rate of duty as well as final products which are cleared on payment of duty shall deposit 8% of the sale price of the exempted final products, unless it maintained separate accounts for these inputs.
4. The contention or the representative of the appellant is that goods which are cleared for export are not exempted nor chargeable to nil rate of duty. The intention int he rule is not to demand duty on goods which are exported also made clear by the words of Sub-rule (6) of that rule, which specifies that provisions of Sub-rule (1) will not apply to the goods exported in bond under Rule 13.
5. The departmental representative falls back upon the Deputy Commissioner’s order. The Deputy Commissioner seems to think that purpose of Rule 57C will be defeated in a case where the modvat credit taken by an assessee of the duty paid on input which is used int he manufacture of goods which are cleared on payment of duty.
6. It is by now well settled that goods which are cleared without payment of duty under Rule 13, having been exported or to be utilised in the manufacture of goods which are to be exported are not goods which are exempted from duty subject to nil rate of duty. Goods may be exempted from payment of duty under notification issued under Section 5A of the Act, or may be cleared at a nil rate of duty in cases where the tariff prescribed. Goods which are cleared without payment of duty in terms of Rule 12 or Rule 13 are neither the one or the other. The Supreme Court in its judgment in Hindustan Petroleum Corporation vs. CCE 1995 (8) RLT 877 has approved for the view taken by the Delhi High Court in Hindustan Aluminium Corporation Ltd. vs. Superintendent of Central Excise 1981 (8) ELT 642, that goods removed without payment of duty under Rule 13 are not exempted goods. That is also sufficient material in the statute book itself to rebut the Deputy Commissioner’s contention that intention is not to allow modvat credit in case where the input is used in the manufacture of goods cleared without payment of duty. Sub-rule (4) or Rule 57 itself provides that credit of the duty paid on inputs used in the manufacture of export products may be refunded in cash, it cannot be utilised towards payment of duty on other final products. It is thus clear that the finished products exempted from payment of duty, cleared without payment of duty as referred to in Sub-rule (1) of Rule 57CC, will not include products cleared under Rule 12 or Rule 13. The provisions of this Rule 57CC cannot apply to the manufacture before us as a result of such clearance.
7. Appeals are accordingly allowed and the impugned order set aside.