2003 (9) TMI 136 - AT - Central Excise

Summary

Issues:
- Applicability of Rule 57CC on the manufacture of "Zero Air"
- Limitation period for duty demand

Analysis:
1. Applicability of Rule 57CC:
The case involved the appellants engaged in manufacturing oxygen, nitrogen, and other gases, using Caustic Soda Lye as an input for separation of carbon dioxide. The issue revolved around the classification of "Zero Air" as a final product or a by-product. The appellants argued that "Zero Air" is a by-product covered under Rule 57D, and Rule 57CC does not apply as it pertains to manufacturers producing two final products, one dutiable and the other cleared at nil rate. The Tribunal agreed, emphasizing that since "Zero Air" was not a regular final product but emerged incidentally depending on customer demand, it qualified as a by-product. Citing the decision in Pushpaman Forgings case, it held that Rule 57CC did not apply, supporting the appellants' position.

2. Limitation Period for Duty Demand:
The appellants contested the duty demand's timing, arguing that the show cause notice issued in 2000 for the period from 1995 to 1999 was beyond the limitation period. They claimed that since the Revenue was aware of their manufacturing process and the sale of "Zero Air" at nil duty, the demand was time-barred. The Tribunal concurred, noting that the Revenue's knowledge of the clearance of "Zero Air" during the period meant the demand was stale. Consequently, the demand was held to be barred by limitation. The Tribunal ruled in favor of the appellants, setting aside the impugned order and granting them consequential relief.

In conclusion, the judgment clarified the classification of "Zero Air" as a by-product, not subject to Rule 57CC, and highlighted the importance of the limitation period in duty demands, ultimately ruling in favor of the appellants based on these grounds.