TaxTMI 
TaxTMI 
2007 (9) TMI 343
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....a gist of the case of the appellant we may conveniently reproduce paragraphs (1) and (2) and a part of para (3) of the referral order: "M/s. Sterlite Industries (I) Ltd. (respondents herein) are engaged in the manufacture of "copper anodes" (Chapter Heading 74.02), which are cleared on payment of duty. The principal raw material for this product is 'copper concentrate', which is imported on payment of duties of Customs including countervailing duty (CVD). During the course of manufacture of copper anodes from copper concentrate, Sulphur-Dioxide (SO2) emerges, which is converted to Sulphur Trioxide (SO3), which, in turn, is converted to Sulphuric Acid (H2SO4). A portion of H2SO4 is cleared without payment of duty to fertilizer manufacturers under Notification No. 5/97-C.E. by following the procedure laid down in Chapter X of the Central Excise Rules, 1944. Another portion of H2SO4 is captively consumed in the manufacture of phosphoric acid by treating it with imported rock phosphate and a portion of the phosphoric acid so manufactured is also cleared under Chapter X procedure without payment of duty, for the manufacture of fertilizers. The remaining portions of H2SO4 and phosphor....
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....in the case of Gas Authority of India Ltd. v. CCE, Mumbai & Vadodara reported in 2001 (136) E.L.T. 1019 (Tri.-Mum.). In the result, the demand of 8% of the sale price of exempted H2SO4 cleared by the assessee during the period of dispute was set aside. The present appeals of the Revenue are directed against the appellate Commissioner's decision. 3. In these appeals, it is submitted by the appellant that, when a by-product is sold, it ceases to be by-product and becomes a final product for purposes of Rule 57CC. On this basis, it is claimed that H2SO4 which emerged as a by-product along with the final product (copper anodes) and was sold to fertilizer manufacturers without payment of duty was a final product for purposes of Rule 57CC. It is also pointed out that H2SO4 had been notified as a final product under Rule 57A vide Notification No. 5/94-C.E. (N.T.) dt. 1-3-94 for the period upto 27-2-99 and Notification No. 21/99-C.E. (N.T.) dt. 28-2-99 for the subsequent period. It is submitted that the expression "any other final product" in Rule 57CC covered all excisable goods manufactured and cleared without payment of duty on account of exemption from duty under Notific....
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....ty; this is tantamount to admitting copper concentrate as input and H2SO4 as final product. (c) In the case of Indian Iron & Steel Co. Ltd. v. CCE - 2002 (141) E.L.T. 695 (Tri.-Kolkata), it was held, with reference to Rule 57CC, that there was no distinction between intended final products and by-products and that the rule would also apply to by-products though not intentionally manufactured; in the case of Binani Zinc Ltd. v. CCE - 2005 (187) E.L.T. 390 (Tri-Bang.), the assessee's claim that H2SO4 was a by-product in the manufacture of zinc (final product) from zinc concentrate (input) was rejected and Rule 57CC was held to be applicable. (d) The question whether an excisable by-product is liable to be treated as a final product for purposes of Rule 57CC is already covered by the Tribunal's Larger Bench decision in the case of Rallies India Ltd. v. CCE - 2007 (208) E.L.T. 25 (Tri.-LB); in this case, the Division Bench decision in Aarthi Drugs case (supra) was overruled and the decisions in the cases of Indian Iron & Steel Co. Ltd. (supra) and Binani Zinc (supra) were approved; the larger Bench has held that an excisable by-product, manufactured intendedly o....
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....this fact was not brought to the notice of the Tribunal's Larger Bench in Rallies India case. (b) The order passed by the Tribunal in the case of Indian Iron & Steel Co. Ltd. [2002 (141) E.L.T. 695] approved by the Larger Bench in Rallies India was not a final order but a referral order which referred the issue (whether provisions of Rule 57CC are applicable to by-products emerging during the course of manufacture of the intended final products and cleared at 'Nil' rate of duty) to a Larger Bench; that Larger Bench, without examining the issue, remanded the case to the Commissioner of Central Excise vide 2002 (143) E.L.T. 442 for fresh adjudication on the basis of a circular of the Board; in this scenario, the view taken by the Division Bench in the above referral order has no precedent value. (c) The decision in Binani Zinc case (supra) approved by the Larger Bench in Rallies India should be considered to have been impliedly overruled by the Apex Court in the case of Shakumbari Sugar & Allied Industries Ltd. (supra). (d) It was held by the Tribunal's Larger Bench, in para-8 of its judgment in the case of Rallies India (supra), that Hydrochloric acid was used only for the ....
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.... 5. In her rejoinder, ld. SDR has extensively referred to the decision of this Bench in the respondents' case reported in 2005 (191) E.L.T. 401 and has submitted that the said decision is not a binding precedent inasmuch as the department's appeal against it has been admitted by the High Court. Contextually, it is submitted that the finding recorded by this Bench, in the said case, to the effect that copper concentrate was used as input for copper anodes only and not for H2SO4 is factually erroneous. It is also argued that, where it was so founds, the question of applicability of Rule 57CC did not arise and, for this reason also, the above decision cannot be followed as a binding precedent. 6. We have given careful consideration to the submissions. 7. Copper concentrate is the assessee's raw material for copper anodes and by-products. It results from concentration of sulphide ores of copper such as chalcopyrite (copper pyrites) of the chemical name 'copper-iron sulphide' and chemical formula 'CuFeS2' vide Chapter 3, McGraw-Hill Encyclopedia of Science & Technology (5th Edition). The process of manufacture of copper anodes and by-products, starting from copper concentrate, i....
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.... merit in ld. SDR's submission that, where it was held that copper concentrate was input for copper anodes (dutiable final product) only, there was no room for examining the applicability of Rule 57CC. The Revenue is said to have preferred appeal to the Hon'ble High Court of Madras against the said order of this Bench. 8. M/s. Rallis India Ltd. were engaged in the manufacture of gelatine starting from animal bones as raw material. The crushed bones were treated with hydrochloric acid, whereupon the inorganic substances in the bone reacted with the acid to form water-soluble compounds. The resulting aqueous solution called 'mother liquor' or 'phosphoryl liquor' was further processed to obtain Phosphoryl 'A' & Phosphoryl 'B', which were classifiable under Heading 23.02 of the CETA Schedule attracting 'nil' rate of duty. The organic matter of the bone was further processed to obtain gelatine falling under Heading 35.03 of the CETA Schedule, which was removed on payment of duty. The question arose whether, on the facts of the case, the manufacturer should pay 8% of the value of the exempted goods in terms of Rule 57CC(1) of the Central Excise Rules, 1944. The Larger Bench noted that....