Per Gowri Shankar :

The respondent to this appeal by the Commissioner, manufacturers cold rolled coils and sheets of iron or steel. Part of the production of these sheets or coils are cleared by it without payment of duty to M/s. Shree Pre-coated Steel Limited, Pune. While the process details are not forthcoming from the appeal or either side, it is not in dispute that M/s. Shree Pre-coated Steel Limited subjected these steel sheets to some further processing and thereafter exported them. The clearance made by the respondent to the exporter was in terms of Notification 47/94. This notification, issued under Rule 13 of the Central Excise Rules, 1944, permits manufacture in bond of goods for being exported subject to the provisions of Chapter X of the Rules being followed.

2. The respondent had taken modvat credit of the duty paid on the inputs used in the manufacture of the steel, which were cleared in terms of the notification. The notice was issued to it proposing to deny the benefit alleging that in accordance with Sub rule (1) of Rule 57CC, the respondent was required to pay, before clearance of this steel, a sum equal to 8% of the price of the goods. The notice proposed exclusion of Sub rule (6) of Rule 57CC on the ground that it can only apply to cases where goods are exported under Rule 13 by the manufacturer, such exports having been made not by the respondent but by another person, this sub rule would not apply.

3. The Assistant Commissioner, after hearing the respondent, confirmed the proposal in the notice demanding duty and imposed a penalty. On appeal by the assessee from this order, the Commissioner (Appeals) found that the goods cleared under bond for export, in terms of Rule 191BB, were neither exempted goods nor chargeable to nil rate of duty, and therefore accepted the contention of the appellant before him that the provisions of Rule Sub Rule (1) of Rule 57CC would not apply. This order is in appeal before us by the Commissioner.

4. The grounds in the appeal are that the respondent has neither removed the goods without payment of duty for export under bond or exported them and hence sub rule (1) of Rule 57CC will apply; it is only the exporter who is eligible for the "export benefit" and not the respondent. By availing of this benefit, there has been double benefit, one to the exporter, and one to the respondent.

5. It is not possible for us to accept the submission that Rule 13 only applies to goods which are exported directly by the manufacturer. The rule specifically provides for the Central Government to specify material which may be removed without payment of duty for the manufacture in bond for export goods. Such specification has been made by way of Notification 47/94, the notification under which the respondent removed the goods. The removal was therefore in terms of Rule 13. Since the goods, which were manufactured in bond by M/s. Shree Pre-Coated Steel Ltd., were exported, the provisions of Rule 13 have been satisfied. This being the case sub rule (6) of Rule 57CC would apply. Therefore, the provisions of sub rule (1) of Rule 57CC will not be applicable in the case of the respondent.

6. As a matter of fact, we do not really see the necessity for the existence of sub rule (6) of Rule 57CC. The judgment of the Supreme Court in Hindustan Petroleum Corporation Ltd. Vs. CCE 1995 (8) RLT 877(SC)=1995 (77) ELT 256 is authority for the proposition that the goods exported under Rule 13 are not exempted from duty. The decisions of this Tribunal in Reliance Industries Ltd. Vs. CCE 1999 (34) RLT 215, [and] India Polyfibres Ltd. Vs. CCE, 2000 (111) ELT 48 [are] to the effect that the goods exported under bond being neither exempted goods nor goods subject to nil rate of duty, the prohibition of Rule 57C will not apply. Therefore, goods exempted under bond therefore will not be covered by sub rule (1) of Rule 57CC. Sub rule (6) has evidently been inserted as a measure of abundant precautions.

7. We are also unable