2004 (1) TMI 244 - AT - Central Excise

Tribunal Overturns Duty Demand on Spent Sulphuric Acid, Supports Clearance to Fertilizer Makers Under Chapter X Rules.

The Tribunal allowed the appeal, setting aside the demand for duty payment on Spent Sulphuric Acid cleared under Chapter X Procedure. It determined that ... Cenvat/Modvat - Clearance of Spent Sulphuric Acid under Chapter X Procedure without payment of duty - HELD THAT:- As per the provisions of Rule 192 of Chapter X Procedure of Central Excise Rules where the Central Government by Notification sanctioned the remission of difference in respect of excisable products used in a specified industrial process any person wishing to obtain remission of duty on such goods, shall make application to the Commissioner stating therein their requirements and purpose and the Commissioner on his satisfaction allowed the appellant to receive the goods on conditions without payment of duty. The obligation is on the receiver of such goods to use the same in a specified industrial process. In case, the goods received under this procedure were not used for specified industrial process, the person who receive the goods is liable to pay the duty hence the goods cleared under Chapter X Procedure are neither exempted nor said to be chargeable to Nil duty. The provisions of Rule 57CC of the Central Excise Rules, provides where a manufacturer is engaged in the manufacture of final product which is chargeable to duty as well as which is exempted from the whole of the duty of excise or chargeable to Nil rate of duty and manufacturer is taking credit on the duty paid on inputs used in both type of products is to pay an amount equal to 8% of the price cleared at Nil rate of duty. As discussed, the goods cleared under Chapter X Procedure are neither exempted goods nor said to be chargeable to Nil rate of duty as the recipient of the goods are duty bound to use these goods for specified purpose and, if, the goods are not used for specified purpose, goods are liable to duty. In this situation, the goods cleared under Chapter X Procedure cannot be said to be exempted from whole of the duty or are chargeable to Nil rate of duty. Thus, the impugned order is set aside and the appeal is allowed. Issues involved: Appeal against order-in-appeal passed by Commissioner (Appeals) regarding the clearance of Spent Sulphuric Acid under Chapter X Procedure without payment of duty.Summary:The appellants, engaged in manufacturing Sulphuric Acid, cleared Spent Sulphuric Acid under Chapter X Procedure without duty payment. A show cause notice was issued demanding payment under Rule 57CC of Central Excise Rules. The appellants contended that Spent Sulphuric Acid is a residue, not the final product, thus Rule 57CC does not apply, citing Rule 57D. They cleared it to fertilizer manufacturers under CT-2 Certificates. Revenue argued it's excisable, citing a Tribunal decision. Tribunal held it's a separate compound, classifiable under Heading 28.07. Appellants cleared it under Chapter X, where goods must be used for a specified purpose, or duty is payable. Rule 57CC applies to products exempt from duty, not applicable here. The appeal was allowed as goods cleared under Chapter X are not exempted or chargeable to Nil duty, setting aside the demand.