2001 (4) TMI 146 - AT - Central Excise

Summary

Issues involved:
The issues involved in this case are whether the manufacturer is required to pay an amount of 8% as per Rule 57CC on the value of ammonium sulphate arising as a by-product in the manufacture of MNI and whether the provisions of Rule 57CC are applicable to a by-product.

Details of the Judgment:

Issue 1: Applicability of Rule 57CC on ammonium sulphate:
The manufacturer contended that ammonium sulphate was a by-product and therefore Rule 57CC would not apply. The Assistant Commissioner accepted this contention and dropped the proceedings. However, the department appealed this decision to the Commissioner (Appeals) who allowed the appeal and set aside the Assistant Commissioner's order.

Issue 2: Interpretation of Rule 57CC and Rule 57D:
The Commissioner (Appeals) based his decision on the marketability of ammonium sulphate, stating that once an item is found to be marketable, it attracts duty liability. However, the Tribunal clarified that the duty payable under Rule 57CC is not related to the duty under Section 3 of the Act and is not considered as duty. The Tribunal emphasized that the marketability of a by-product does not affect its exemption status under Rule 57D.

Issue 3: Application of Rule 57CC and Rule 57D:
The Tribunal highlighted that prior to the enactment of Rule 57CC, a manufacturer could take credit of duty paid on inputs contained in a by-product even if the final product was exempted from duty. The introduction of Rule 57CC aimed to provide a clear procedure without eliminating the benefit available under Rule 57D for a by-product. The Tribunal emphasized that the marketability of a by-product does not impact its exemption status under Rule 57D.

Conclusion:
The Tribunal found that there was no basis for invoking the provision of Rule 57CC as the marketability of ammonium sulphate does not affect its status as a by-product. Therefore, the appeal was allowed, and the impugned order was set aside.