Common input rule cannot be applied to an incidental by-product arising during manufacture of a dutiable product.

Rule 57CC applies only where the same input is used to manufacture both dutiable and exempt final products, and it cannot be invoked merely because a by-product emerges incidentally during manufacture. Copper concentrate was wholly consumed in producing copper cathode, while sulphuric acid arose inevitably as a by-product of the smelting process. The by-product was not a separately manufactured exempt final product, and Rules 57C and 57D did not permit denial or variation of credit on that basis. Accordingly, the demand to pay 8% on clearance of sulphuric acid was unsustainable.

---

---

Issues: Whether Rule 57CC could be invoked to demand 8% of the price of sulphuric acid cleared without duty under Chapter X procedure, on the premise that the assessee manufactured both a dutiable final product and an exempt final product, when sulphuric acid arose only as a by-product in the manufacture of copper cathode.

Analysis: Rule 57CC applies only where the same input is used in the manufacture of both dutiable and exempt final products. Rule 57C and Rule 57D likewise operate on the basis that credit may be denied or varied only where inputs are used in exempt final products, and that credit is not to be denied merely because waste, refuse, or a by-product arises. The Tribunal applied the settled principle that a by-product arising incidentally in the course of manufacture does not mean that part of the input is used in its production. On the facts, copper concentrate was wholly used in the manufacture of copper cathode, and sulphuric acid emerged inevitably as a by-product of the smelting process. It was not a separately manufactured exempt final product for the purpose of Rule 57CC.

Conclusion: Rule 57CC was not attracted, and the demand of 8% on clearance of sulphuric acid was unsustainable.

Ratio Decidendi: Where an input is wholly consumed in the manufacture of one dutiable final product, the incidental emergence of a by-product does not justify treating that by-product as another final product or invoking the provision meant for common inputs used in both dutiable and exempt final products.

---