2011 (8) TMI 882 - HC - Central Excise

Demand - Spent Sulphuric Acid - Rule 57CC of the Central Excise Rules 1944 - eight per cent duty is provided only in case where there are more than one final products categoriesed in Rule 57CC as second category of final product and that the process of manufacture is such in which the inputs in any final product cannot be easily determined or computed and separate inventory and accounts of the receipt and use of inputs cannot be maintained - Appeal is dismissed

Summary

Issues:
1. Whether spent Sulphuric Acid is a dutiable product.
2. Applicability of Rule 57AD of the Central Excise Rules, 1944 and Rule 6(3)(b) of the Cenvat Credit Rules, 2001.
3. Availability of recovery mechanism under Rule 6(3)(b) and applicability of Rule 13.
4. Interpretation of Rule 57CC of the Central Excise Rules, 1944 regarding the duty on final products.

Analysis:

1. The appeal was filed against the order of the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, confirming a demand of 8% on the price of spent Sulphuric acid and imposing a penalty. The appellant questioned whether spent Sulphuric Acid produced is a dutiable product.

2. The Tribunal dismissed the appeal and upheld the demand, citing Rule 57CC of the Central Excise Rules, 1944. It was argued that spent Sulphuric Acid is a by-product in the manufacturing process of Acid Slurry and not a final product. The process involves mixing inputs to manufacture Acid Slurry, with spent Sulphuric Acid being drained as a by-product.

3. The appellant raised concerns regarding the applicability of Rule 57AD and Rule 6(3)(b) of the Cenvat Credit Rules, 2001, along with the availability of a recovery mechanism under Rule 6(3)(b) and Rule 13. The court emphasized that the duty at 8% under Rule 57CC is applicable only when there are multiple final product categories, and the process makes it difficult to determine or compute inputs for each final product separately.

4. The court agreed with the respondent's argument that the duty cannot be imposed on the clearance of spent Sulphuric Acid as it is not a final product attracting duty under Rule 57CC. It was concluded that CENVAT credit cannot be denied, and penalties cannot be imposed on the clearance of spent Sulphuric Acid, which is considered a by-product in the manufacturing process.

5. Ultimately, the Central Excise Appeal was dismissed, affirming that spent Sulphuric Acid is not a dutiable final product under Rule 57CC of the Central Excise Rules, 1944. The judgment clarified the distinction between final products and by-products in the context of excise duty implications.