AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 181
X X X X Extracts X X X X
X X X X Extracts X X X X
....tantial question of law for consideration: "Whether Tribunal order is correct in rejecting the recovery of Modvat Credit attributable to the inputs relating to final product cleared under the exempted category under Rule 57C of Central Excise Rules, 1944?" 2. The first respondent/assessee is engaged in the business of manufacturing Linear Alkyl Benzene Sulphoric Acid (LABSA) falling under chapter sub heading 3402.90 of the Central Excise Tariff Act, 1985. They were availing facilities under Rule 57G and the declared inputs were Linear Alkyl Benzene and Sulphuric Acid. In the course of manufacture of Acid Slurry, Spent Sulphuric Acid is obtained as by-product. The assessee had cleared Spent Sulphuric Acid partly on payment of duty and part....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te Ltd. (1996 (84) ELT 354) and came to the conclusion that the argument of the lower authority that Spent Sulphuric Acid was not a by-product or waste or residue was therefore, not tenable. 5. With regard to the credit of duty required to be reversed in respect of Sulphuric Acid contained in the Spent Sulphuric Acid, which has been cleared without payment of duty by availing exemption under Notification 8/96-CE dated 23.7.1996 and Notification No.4/97-CE dated 1.3.97, the Commissioner (Appeals), by placing reliance on the decisions in the case of Tamil Nadu Industrial Explosives Ltd. (1996 (14) RLT 479) and in the case of Sarchem Surfactanta Pvt.Ltd. (1996 (87) ELT 105), held as follows: "5. As regards whether credit of duty is required ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or varied on the ground that some inputs is contained in any waste, refuse or by-product arising during the manufacture of final product whether or not such waste, refuse or by-product is exempt from the whole of duty of excise leviable thereon or is chargeable to nil rate of duty." 6. Aggrieved by the above-said order of the Commissioner (Appeals), the Revenue preferred an appeal before the Tribunal. Before the Tribunal, both the Department as well as the assessee conceded that the issue has been covered by the decision of the Tribunal in Final Order No.390-399/05 dated 10.3.2005 and Final Order No.543-545/05 dated 30.3.2005. Accordingly, the Tribunal following the decisions of the Tribunal dismissed the appeal filed by the Revenue holdin....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by filing the present appeal raising the above-mentioned question of law. 8. Mr.A.P.Srinivas, learned Standing Counsel appearing for the appellant submits that the Spent Sulphuric Acid is a final product and is marketable and therefore, no credit of duty should be allowed. He further contends that Rule 57D does not apply to the facts of the present case as the commodity Spent Sulphuric Acid is a fully manufactured product and is a separate chemically defined compound having separate classification. Therefore, the assessee is not entitled for Modvat Credit in respect of Spent Sulphuric Acid cleared without payment of duty. 9. Learned counsel appearing for the first respondent/assessee submitted that before the Tribunal, when the Departmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be necessary to understand the properties of sulphuric acid. From what is explained above including the use of sulphuric acid for the production of zinc, it becomes apparent that sulphuric acid is indeed a by-product. In fact, it is so treated by the respondents in their balance sheet as well as various other documents which were filed by the respondents in the courts below. It is also a common case of the parties that Hindustan Zinc Limited and Birla Copper were established to produce zinc and copper respectively and not for the production of sulphuric acid. It was argued by the learned Counsel for the respondents, which could not be disputed by the learned Solicitor General, that emergence of sulphur dioxide in the calcination process of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ision of the Supreme Court makes it clear that the invocation of Rule 57C by the Department is not justified and the Commissioner (Appeals) and the Tribunal were correct in holding in favour of the assessee. 14. Insofar as Rule 57D is concerned, the very language of Rule 57D makes it clear that credit of duty shall not be denied or varied on the ground that part of the inputs contained in any waste, refuse or by-product arising during the manufacture of the final product, or that the inputs have become waste during the course of manufacture of the final product. It also states that it is of no consequence whether the by-product such as waste, refuse or by-product is exempt from the whole of the duty of excise leviable thereon or chargeable....