Full Judgment
2. The respondents are engaged in the manufacture of I.C. Engines as also P.D. Pumps. Wherever the I.C. Engines are being cleared by them, they are paying duty on the same after availing the benefit of Modvat credit in respect of the inputs used in the manufacture of the said I.C. Engines. However, a part of the said engine is also being used by them captively in the manufacture of P.D. Pump, which are cleared without payment of duty inasmuch as the same are exempted. Such use of I.C. engines captively is exempted in terms of Notification No./97-CE., dated 1-3-1997. As such the respondents reversed 8% of the value of I.C Engines in respect of such captively consumed engines, in terms of the provision of Rule 57CC. The revenue's case is that the respondent should have reversed 8% of the value of the I.C. Engines fitted with P.D. Pumps, inasmuch as it is the pump, which is being cleared by them finally. The Commissioner (Appeals) has not accepted the above stand of the revenue on the observations that I.C. Engine is a final product by itself and as such, 8% of the value of the I.C Engine is required to be reversed. He has also taken note of the fact that in subsequent demand the original adjudicating authority has himself dropped the demand and the revenue has not challenged such orders.
3. After considering the submissions made by both sides, I find force in the reasoning adopted by the Commissioner (Appeals). I.C. Engines are considered as a final products, inasmuch as the respondents are also clearing the same on payment of duty. As such, when they are cleared without payment of duty for captive consumption, the same are required to debit an amount of 8% of the value in terms of Rule 57CC.It is the value of the engine, which has to be taken into account for the purposes of the said rule and not the value of the final products i.e. PD Pumps in which such engines are used.
4. In view of the above, no merits are found in the revenue's appeals.
The same are accordingly rejected.