2019 (7) TMI 1776 - AT - Central Excise

CENVAT credit - common inputs - by-product - concentrates used in relation to the said manufacture - non-maintenance of separate inventory and accounts and are using the said input in relation to the manufacture of silver - HELD THAT - The perusal of this procedure makes it abundantly clear that this pyro silver is being extracted as an unavoidable remnant which apparently and admittedly cleared by the appellants without demand of duty due to specific exemption available to the assessee. The process further clarifies that since no other separate activity or process is being employed by the appellant to extract the product which has been cleared by them the extraction of the impugned silver cannot at all be called as the activity of manufacture and therefore has rightly been impressed upon to be out of the ambit of Section 57 CC of Central Excise Rules 1944 - The argument of the Department that the unavoidable remnant is a Pyro-silver but the product cleared by the appellant is silver is not acceptable as it is not coming out of the show cause notice. It is apparent that whatever emerges from the oxides of zinc and lead during the process of smelting that is the Pyro silver the same is cleared as it is by the appellant. There is no evidence to the contrary. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand under Rule 57 CC of Central Excise Rules, 1944 in respect of Silver emerging as a by-product during the course of manufacture of Zinc & Lead.

Analysis:
The judgment involved five appeals with a common issue of demand under Rule 57 CC of Central Excise Rules, 1944 concerning the production of silver as a by-product during the manufacturing process of zinc and lead. The appellants were accused of not complying with the provisions of Rule 57 CC as they were clearing the silver without paying duty. The appeals were rejected by the Order-in-Appeal, leading the appellants to approach the Tribunal for relief.

The factual matrix revealed that the appellants were involved in manufacturing zinc and lead at a smelter plant. The Department alleged non-compliance with Rule 57 CC due to the clearance of silver produced during the extraction of zinc and lead without duty payment. The appellants argued that the silver was an unavoidable by-product of the extraction process and not a separate manufacturing activity, thus falling outside the purview of Rule 57 CC. They cited previous tribunal decisions in their favor and requested the order to be set aside.

Upon considering the arguments, the Tribunal analyzed the extraction process in detail. It was observed that silver emerged as a by-product during the refining of lead, containing various impurities. The Tribunal noted that the process did not involve separate activities for silver extraction, and the cleared silver was a result of the refining process. The Tribunal found the situation analogous to previous cases where the extraction of by-products did not fall under Rule 57 CC.

The Tribunal referred to specific provisions of the Central Excise Rules and previous tribunal decisions to support their findings. They highlighted that the extraction of silver was an unavoidable part of the refining process and did not constitute a separate manufacturing activity subject to Rule 57 CC. The Tribunal disagreed with the Commissioner's interpretation and set aside the order, allowing all five appeals in favor of the appellants.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the challenged order and allowing all five appeals related to the demand under Rule 57 CC of Central Excise Rules, 1944 concerning the production of silver as a by-product during the manufacture of zinc and lead.