TaxTMI 
TaxTMI 
2007 (11) TMI 276
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....peals filed by the Department under section 35L of Central Excise Act, 1944 is : Whether Lean Gas produced by Gas Authority of India Limited (GAIL) is a manufactured marketable final product or by-product? 2. On April 1, 1999, show cause notice was issued to the assessee by the Superintendent, Central Excise, in which it was alleged by the Department that the notice (assessee) had cleared Lean Gas in bulk to M/s. Indian Petrochemicals Corporation Limited (IPCL), M/s. Vikram Ispat Ltd., and M/s. Ispat Industries as Natural Gas under Chapter Heading 2611.21 claiming nil rate of duty. In the said show cause notice, however, the allegation was based on the footing that Lean Gas was a by-product after due manufacturing process stood carried out....
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....h waste or refuse or by-products exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty or is not specified as a final product under Rule 57A. (2) Credit of specified duty shall also not be denied or varied in case any intermediate products have come into existence during the course of manufacture of final products or the inputs are used in the manufacture of capital goods as defined in Rule 57Q and such intermediate products or capital goods are not chargeable to duty of excise." 4. On the other hand, the Department contended that since Lean Gas was itself a final product, the assessee was not entitled to the benefit of Modvat credit under Rule 57CC of the said Rules. We quote hereinbelow Rule 57C....
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....der Rule 57A. (3) The provisions of sub-rule (1) shall not apply to final products falling under Chapters 50 to 63 of the Schedule to the Central Excise Tariff Act 1985 (5 of 1986). (4) The provisions of sub-rule (1) shall also not apply to - (a) Articles of plastics falling within Chapter 39; (b) Tyres of a kind used on animal drawn vehicles or handcarts and their tubes, falling within Chapter 40; (c) Black and White television sets, falling within Chapter 85; and (d) Newsprint, in rolls or sheets, falling within Chapter heading No. 48.01; which are exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty. (5) In the case of final products referred to in sub-rule (3) or sub-rule (4) and....
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....rt is whether Lean Gas was a by-product or a final product. If it is a byproduct then the assessee would be entitled to the benefit of Rule 57D. On the other hand, if Lean Gas is a final product, then the assessee would not be entitled to the benefit of Rule 57D in view of the provisions of Rule 57CC as it refers to set off/adjustment of duty payable. 6. We are not required to examine the above issue for the simple reason that on the facts of the present case, as can be seen from the extract quoted from the show cause notice, which is the foundation of the Demand made by the Department, Lean Gas is a by-product which emerges when LPG is extracted from natural gas. If the case of the Department itself in the show cause notice was that Lean ....