Validity of Duty Demand on Spent Sulphuric Acid Upheld with Relief in Penalty

DCW LTD. Versus COLLECTOR OF CENTRAL EXCISE, MADURAI

DCW LTD. Versus COLLECTOR OF CENTRAL EXCISE, MADURAI - 1996 (81) E.L.T. 381 (Tribunal) Issues:
- Whether duty demanded on spent sulphuric acid under Rule 57F(4)(a) of Central Excise Rules is valid.
- Whether the Department can invoke the longer period under Rule 57-I read with Section 11A of Central Excises and Salt Act, 1944.

Analysis:

Issue 1: Validity of Duty Demand on Spent Sulphuric Acid
The appellants availed MODVAT Credit on Sulphuric Acid used in manufacturing chlorine and trichlorethylene. The Department alleged that the spent sulphuric acid, considered waste, should be cleared on payment of duty under Rule 57F(4)(a) of Central Excise Rules. The appellants argued that waste material remains waste even if it has value, citing various judicial pronouncements. However, the Supreme Court clarified in a different case that waste and scrap liable to duty are distinct from unmarketable refuse or rubbish. Spent sulphuric acid, sold to industrial consumers, was found to be a marketable product, not unmarketable waste. The Tribunal had classified such spent sulphuric acid as a chemical product. Therefore, the duty demand on spent sulphuric acid under Rule 57F(4)(a) was deemed valid.

Issue 2: Invocation of Longer Period for Duty Demand
Regarding the invocation of the longer period for duty demand under Rule 57-I read with Section 11A, the appellants had voluntarily disclosed the particulars of clearances of spent sulphuric acid to the Department when duty liability was pointed out. The Department had not been aware of these clearances prior to the disclosure. As the appellants promptly paid the duty upon notification, their argument on limitation was deemed invalid. However, their compliance and readiness to pay duty upon notification were considered reasonable grounds for relief in terms of penalty. Consequently, the penalty imposed by the Additional Collector was set aside, and the order was modified accordingly. The overall decision upheld the duty demand on spent sulphuric acid but provided relief in terms of penalty due to the appellants' compliance.

In conclusion, the judgment affirmed the validity of duty demand on spent sulphuric acid under Rule 57F(4)(a) and addressed the invocation of the longer period for duty demand, ultimately modifying the penalty imposed by the Additional Collector based on the appellants' compliance and conduct.