Excise duty demand on Ammonium Sulphate by-product set aside under Rule 6(3) and Notification 01/2011

The CESTAT Ahmedabad set aside a demand for differential excise duty on Ammonium Sulphate, a by-product. The department sought 6% duty instead of 1% claiming appellant availed Cenvat Credit on inputs used in manufacturing. The tribunal held that for unavoidable by-products, input stage credit cannot be attributed even if cleared at nil duty rate. Exemption Notification No.01/2011 conditions regarding non-availment of Cenvat Credit cannot be denied for by-products. Following precedent in appellant's own case, Rule 6(3) demand was deemed inapplicable. The appeal was allowed.

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Issues:
Whether the appellant is liable to pay 6% duty on the by-product Ammonium Sulphate due to availing Cenvat Credit on inputs used in its production.

Analysis:
The Appellate Tribunal considered the issue of liability for duty on Ammonium Sulphate in the present case. The appellant had availed Cenvat Credit on inputs used in the production of Ammonium Sulphate, leading to a demand for 6% duty instead of the 1% duty paid. The Tribunal noted that Ammonium Sulphate is generated as a by-product unavoidably, and in such cases, it cannot be considered that input stage credit was availed. The Tribunal referred to previous judgments in the appellant's own case, where it was established that Ammonium Sulphate, as a by-product, is not liable for duty under Rule 6(3) of the Cenvat Credit Rules. Therefore, the Tribunal set aside the demand for 6% duty, ruling in favor of the appellant.

In another instance, the Tribunal examined a similar issue regarding the liability for duty on Ammonium Sulphate, a by-product of the manufacture of Potassium Cyanide and Sodium Cyanide. The appellant had availed the benefit of a notification prescribing a concessional rate of duty subject to certain conditions. The Tribunal reiterated that Ammonium Sulphate being a by-product does not attract the provisions of Rule 6(3) of the Cenvat Credit Rules. Referring to previous decisions in the appellant's case, the Tribunal held that the demand for excise duty on Ammonium Sulphate, based on availing Cenvat Credit on inputs, was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed.

The Tribunal emphasized that the issue of liability for duty on Ammonium Sulphate had been settled in the appellant's own case through previous judgments. It was established that the Cenvat Credit on inputs cannot be considered as availed when a by-product like Ammonium Sulphate is cleared. Therefore, the demand for excise duty on Ammonium Sulphate was deemed unsustainable, leading to the setting aside of the impugned order and allowing the appeal.

In conclusion, the Tribunal, based on settled positions in the appellant's own case, ruled in favor of the appellant regarding the liability for duty on Ammonium Sulphate. The demand for duty was set aside, and the appeals were allowed in both instances.

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