Credit reversal demand on exempt by-product clearances failed where identical facts were governed by an earlier binding ruling.

Credit reversal demand on sulphuric acid cleared as a by-product to fertilizer units was held unsustainable where the clearances were covered by exemption notifications and the facts were identical to the assessee's earlier decided case. The earlier Supreme Court ruling in the assessee's own matter was treated as governing the controversy, so the demand raised under Rule 57CC of the Central Excise Rules, 1944 and Rule 6(3) of the Cenvat Credit Rules, 2004 could not be maintained. The departmental appeal therefore failed.

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Issues: Whether the demand of 5%, 6%, 8% or 10% on sulphuric acid cleared to fertilizer units was sustainable under the credit reversal provisions, despite exemption notifications and the earlier Supreme Court decision in the assessee's own case.

Analysis: The respondent manufactured zinc products and sulphuric acid arose as a by-product during the process. Sulphuric acid sold in the open market suffered duty, while clearances to fertilizer units were covered by exemption notifications. The Commissioner had dropped the demand by following the Supreme Court decision in the assessee's own case. The facts in the present matter were found to be identical, and the earlier ruling was treated as governing the controversy. In those circumstances, the demand under Rule 57CC of the Central Excise Rules, 1944 and Rule 6(3) of the Cenvat Credit Rules, 2004 could not be sustained.

Conclusion: The demand was not sustainable and the appeal by the Department failed.

Ratio Decidendi: Where exempt clearances of a by-product are covered by the applicable exemption notifications and the facts are identical to an earlier binding decision in the assessee's own case, a credit reversal demand under the relevant Cenvat or excise provisions cannot be sustained.

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