2008 (7) TMI 999 - AT - Central Excise

Whether the respondent by not maintaining separate accounts in respect of their byproduct viz. spent sulphuric acid cleared under Notification No.4/2006-CE for specific end use are required to maintain separate accounts and because of the failure whether they should pay 10% of the value as required under Rule 6(3)?

Summary

Issues:
1. Appeal against order confirming demand for 10% of the value under Rule 6(3) of cenvat credit rules for clearing spent sulphuric acid without payment of duty.
2. Requirement of maintaining separate accounts for input used in the manufacture of the main product and byproduct.
3. Interpretation of goods cleared under Chapter X procedure.
4. Applicability of Rule 57CC and compliance with provisions of Indian Power Alcohol Act 1948.

Analysis:
1. The appeal was filed by Revenue against the Commissioner (Appeals) order confirming the demand for 10% of the value under Rule 6(3) of cenvat credit rules due to the clearance of spent sulphuric acid without payment of duty. The respondent cleared the acid under Notification No.04/2006-CE, but as they did not maintain separate accounts for inputs used in manufacturing the main product and the byproduct, a demand of &8377; 2,98,548/- with interest was imposed along with a penalty equivalent to duty.

2. The Commissioner (Appeals) relied on the Tribunal's judgment in the case of CCE, Indore vs. Aureola Chemicals Ltd., stating that goods cleared under Chapter X procedure are not exempted nor chargeable to Nil rate of duty. The issue of maintaining separate accounts for byproducts was crucial in this case.

3. The respondent filed a cross-objection, arguing against the interference with the Commissioner (Appeals) decision. The Revenue cited the Tribunal's Larger Bench decision in the case of Rallies India Ltd. vs. CCE, Salem, emphasizing that byproducts should be treated as a result of intended manufacture. However, the presiding Member found this argument irrelevant to the case at hand.

4. The presiding Member disagreed with the Revenue's arguments, stating that the issue was not about the dutiability of the byproduct but about the necessity of maintaining separate accounts for byproducts cleared under Notification No.4/2006-CE. The judgment in the case of CCE, Ahmedabad vs. Keti Chemicals was cited, highlighting that goods cleared for specific end-use are not exempted and are liable to duty if not used for the specified purpose. Following this decision, the appeal filed by the department was rejected.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the rationale behind the decision rendered by the Appellate Tribunal CESTAT AHMEDABAD.