1999 (7) TMI 91 - AT - Central Excise

Tribunal Decision: Spent Sulphuric Acid Classified, Modvat Credit Allowed

The Tribunal classified Spent Sulphuric Acid under Heading 28.07, allowed Modvat credit for the entire quantity of Sulphuric Acid used in manufacturing, ... Modvat - Input - Sulphuric acid Issues Involved:1. Classification of Spent Sulphuric Acid.2. Modvat credit eligibility for Sulphuric Acid used in the manufacturing process.3. Excise duty applicability on Spent Sulphuric Acid.Summary:1. Classification of Spent Sulphuric Acid:The primary issue was whether Spent Sulphuric Acid (Dilute Sulphuric Acid) is distinct from Sulphuric Acid and should be classified under Heading 38.23 as an excisable product or if it is essentially the same as Sulphuric Acid under Heading 28.07, thus not requiring separate classification. The Tribunal concluded that Spent Sulphuric Acid is a separate chemically defined compound and falls under Heading 28.07 of the Central Excise Tariff Act, 1985, based on Note 1(a) & (b) to Chapter 28, which includes products dissolved in water.2. Modvat Credit Eligibility:The Tribunal examined whether Modvat credit is admissible for the entire quantity of Sulphuric Acid used in the manufacturing process, even when Spent Sulphuric Acid emerges as a by-product. It was determined that Modvat credit is claimable on the entire quantity of Sulphuric Acid used, as the input was utilized in the manufacturing process. This aligns with the Allahabad High Court's decision in Varuna Sulphonators Pvt. Ltd. - 1993 (68) E.L.T. 42, which held that the input is considered used in manufacturing if it is physically involved in the process, regardless of its complete assimilation in the final product.3. Excise Duty Applicability:The Tribunal addressed whether Spent Sulphuric Acid should be subject to excise duty. It was argued that Spent Sulphuric Acid, being a by-product, is distinct from waste like dross and skimmings and should be considered an excisable product. The Tribunal referenced the DCW Ltd. case, which held that Spent Sulphuric Acid is marketable and thus qualifies as goods subject to duty under Rule 57F(4) of the Central Excise Rules. Consequently, duty is leviable on Spent Sulphuric Acid as it emerges as a by-product in the manufacturing process.Conclusion:The Tribunal concluded that Spent Sulphuric Acid is classifiable under Heading 28.07, Modvat credit is admissible for the entire quantity of Sulphuric Acid used, and Spent Sulphuric Acid is subject to excise duty as an excisable by-product. The reference was disposed of accordingly, and the appeals were directed to be placed before the concerned Bench for appropriate orders.