2011 (3) TMI 405 - HC - Central Excise

Demand - assessee has received chlorine gas in cylinders, it was found that a portion of chlorine was left out in the cylinders and therefore, the demand was made by the department to such remaining quantity of chlorine which gets returned to the supplier on return of the cylinder - In the case of Commissioner of Central Excise, Delhi-I v. BOC India Ltd. - (2003 -TMI - 52451 - CESTAT, NORTHERN BENCH, NEW DELHI), wherein the Tribunal of Delhi, while considering the Cenvat/Modvat and the processing loss, held that gases lost during manufacturing process to be considered as used in or in relation to manufacturing process - Decided in favour of the assessee

Summary

Issues:
Appeal under Section 35G of the Central Excise Act, 1944 against orders dismissing appeals and confirming orders in favor of the assessee regarding liability for tax on remaining chlorine gas in cylinders.

Analysis:
The appeal before the High Court of Andhra Pradesh involved a dispute over the liability for tax on the remaining quantity of chlorine gas in cylinders returned to the supplier. The department claimed that since the chlorine was back with the assessee, they were liable for the tax. The authorities, including the Tribunal, rejected this claim based on a precedent set by Hindustan Lever Ltd. v. CCE, Mumbai, where it was held that assessees are eligible for Cenvat credit on inputs not used in the manufacturing process. The High Court noted that the facts in the present case were similar to the precedent cited, and no distinction or authoritative binding precedent was presented to reach a different conclusion.

The respondent-assessee relied on Commissioner of Central Excise, Surat v. Kline Chemicals P. Ltd., where it was held that a part of chlorine gas deemed as used in the manufacturing process was eligible for Modvat credit. Another decision, Commissioner of Central Excise, Delhi-I v. BOC India Ltd., supported the view that gases lost during the manufacturing process should be considered as used in or in relation to the manufacturing process. The High Court agreed with these principles and found no reason for interference on either factual or legal grounds, ultimately dismissing the appeal.

In conclusion, the High Court dismissed the appeal under Section 35G of the Central Excise Act, 1944, as no merits were found in the case based on the established principles and precedents. No costs were awarded in the judgment.