2004 (1) TMI 580 - AT - Central Excise

Summary

Issues:
1. Validity of the impugned order reversing duty demand and penalty.
2. Availability of Modvat credit on inputs used in the manufacture of Spent Sulphuric Acid.

Issue 1: Validity of the impugned order reversing duty demand and penalty:
The appeal before the Appellate Tribunal concerned the validity of an order where the Commissioner (Appeals) had reversed the duty demand and penalty imposed by the adjudicating authority. The Revenue challenged this decision, questioning the legality of the impugned order.

Issue 2: Availability of Modvat credit on inputs used in the manufacture of Spent Sulphuric Acid:
The core issue in this appeal revolved around the availability of Modvat credit on inputs utilized in producing Spent Sulphuric Acid, which was cleared at NIL rate of duty. The Revenue argued that the respondents should reverse 8% adv. Zin as per Rule 57CC(1) since Spent Sulphuric Acid was considered a final product by the respondents and not a bye-product. On the other hand, the respondents contended that Spent Sulphuric Acid was a bye-product, emphasizing that their main product was Acid Slurry used in manufacturing Detergent Powder or Cake.

Upon examination, it was revealed that the respondents had initially registered their products, including Spent Acid, as bye-products. However, in their classification list submitted to the Department, they categorized Spent Sulphuric Acid as a product, not a bye-product, indicating a discrepancy in their representations. The Tribunal noted that the respondents failed to rectify this misrepresentation or seek any correction from the Department. Consequently, it was established that the respondents engaged in the manufacture of both Acid Slurry and Spent Sulphuric Acid, with the latter cleared at NIL rate of duty.

The Tribunal concluded that Rule 57CC applied to the appellants, necessitating the reversal of 8% adv. on the value of the product cleared at NIL duty rate. The precedents cited by both parties were deemed inapplicable to the current case, as the Modvat credit on inputs for Spent Sulphuric Acid had not been reversed. Therefore, the impugned order of the Commissioner (Appeals) was set aside, restoring the order-in-original and accepting the appeal of the Revenue.