2010 (3) TMI 561 - AT - Central Excise

Tribunal rules sulphuric acid not exempt, setting aside penalty under Cenvat Credit Rules.

The Tribunal held that Rule 6 of the Cenvat Credit Rules, 2004 was not applicable as sulphuric acid was not classified as an exempted product when ... Demand - the appellants are the manufacturer of Sulphuric Acid the said product is excisable and chargeable to duty at the rate of 16% BED. The said products are regularly supplied for various industrial uses and are cleared on payment of duty under cover of invoice as per Rule 8 read with Rule 11 and the monthly returns are also filed as per Rule 12 of the Central Excise Rules, 2002. Held that - impugned goods cannot be termed as exempted product or chargeable to nil rate of duty. Rule 6 of Cenvat Credit Rules, 2004 not applicable. Assessee not required to reverse 10% of value of goods cleared. Issues:1. Applicability of Rule 6 of the Cenvat Credit Rules, 2004 to the case.2. Classification of the product (sulphuric acid) as exempted or dutiable.3. Impact of supplying goods under CT-3 certificate on the duty liability.4. Interpretation of relevant case laws in determining duty liability.5. Justifiability of the penalty imposed under Rule 15 of the Cenvat Credit Rules 2004.Issue 1: The main contention revolved around the applicability of Rule 6 of the Cenvat Credit Rules, 2004 to the case. The appellant argued that the product, sulphuric acid, was not an exempted product, hence Rule 6 did not apply. The appellant cited various decisions supporting this argument. The Tribunal analyzed these arguments and held that Rule 6 was not applicable as the sulphuric acid was not an exempted product, especially when supplied under CT-3 certificates. The Tribunal referred to precedents like CCE v. Advance Surfactants India Ltd. and Aureola Chemicals Ltd. v. CCE to support this conclusion.Issue 2: The classification of the product, sulphuric acid, as exempted or dutiable was crucial in determining the duty liability. The Tribunal emphasized that the product was not exempted when supplied under CT-3 certificates, as per relevant notifications. This classification played a significant role in deciding the duty liability under Rule 6 of the Cenvat Credit Rules, 2004.Issue 3: The impact of supplying goods under CT-3 certificates on duty liability was a key aspect of the case. The Tribunal noted that the appellants supplied sulphuric acid under CT-3 certificates to fertilizer manufacturers. This supply method influenced the duty liability and was a crucial factor in determining whether Rule 6 applied to the case.Issue 4: The interpretation of relevant case laws played a vital role in determining the duty liability in this case. The Tribunal extensively discussed and applied precedents such as Ballarpur Industries Ltd., Kesoram Rayon v. CCE, and CCE v. Guljag Industries Limited to analyze the duty liability of the appellants. These cases provided essential guidance in understanding the applicability of Rule 6 and the duty implications of supplying goods under specific procedures.Issue 5: The justifiability of the penalty imposed under Rule 15 of the Cenvat Credit Rules 2004 was also addressed. The Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief. The decision was based on the analysis of the duty liability under Rule 6 and the classification of the product as not exempted when supplied under CT-3 certificates. The Tribunal's decision was supported by the interpretation of relevant case laws and legal principles.