2007 (3) TMI 120

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....ch is fully exempt from excise duty. 1.1 The appellants also manufactured Acid Slurry in the manufacture of which Linear Alkyl Benzene (LAB) and Sulphonic Acid are used and credit of duty paid on these two items is taken. In the course of manufacture of Acid Slurry, Spent Sulphuric Acid is also produced, which is used by the appellants in the manufacture of SSP, a fertilizer which is exempt from excise duty. 1.2 It is the contention of the Department that Cenvatable inputs have been used in the manufacture of fertilizer which is exempted from duty, and since no separate accounts have been maintained, the appellants are required to pay 8% (10% from September, 2004) of the sale value of the fertilizers namely, DAP and SSP. 2. Shri V.....

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....Spent Sulphuric Acid was being transferred by the appellants by tankers to the SSP Plant for use there. In support of his argument, he relies on Texmo Indus tries Ltd. v. CCE - 2007 (208) E.L.T. 338 (LB) which held that 8% of the value of pumps sought by the Revenue is not required to be paid, but 8% of the value of Castings which was the intermediate product is required to be paid. In this case, the Tribunal held that Castings made from duty-paid inputs is to be treated as finished goods. He also refers to the decision of the Tribunal in the case of Shivalik Agro Poly Products Ltd. v. CCE - 1999 (114) E.L.T. 760 (Tribunal), which has been approved by the Honourable Supreme Court, vide 2005 (184) E.L.T. 124 (S.C.) holding that if the duty i....

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....that these two intermediate products are treated as final products in terms of the Cenvat Credit Rules, all that requires is that these products should either pay the duty or if exemption is sought on these products, then 8% of the value of these goods should be recovered. We find no justification whatsoever for ordering to recover 8% of the value of the exempted fertilizers in the production of which small quantity of NFC and Spent Sulphuric Acid is used in the subsequent process and in a different plant. We take note of the fact that the appellants themselves, subsequent to the Adjudication Order, have paid 16% of the duty on all these items and hence, the credit of duty taken by them on the relevant inputs is in order and there is no rea....