2005 (4) TMI 113 - AT - Central Excise

Summary

Issues:
Whether duty of excise is liable on inputs cleared after being used in manufacturing process.

Analysis:
The case involved the question of whether duty of excise is payable on inputs, specifically mercury, cleared from the factory after being used in the manufacturing process. The appellant, a manufacturer of caustic soda, used mercury in the electrolytic process as a cathode and claimed duty paid on mercury as Modvat credit. The Department demanded excise duty on the contaminated mercury drained from the electrolytic cell after being used in manufacturing. The appellant argued that the drained mercury should be considered waste as it had been used in the manufacturing process. They also contended that there was no provision in the Cenvat Credit Rules, 2001 similar to Rule 57F(4) of the Central Excise Rules, 1944, which allowed clearance of waste on payment of duty. The Revenue, on the other hand, argued that since the appellant cleared the mercury as a product after use, it was liable for excise duty. They relied on Chapter 28 of the Central Excise Tariff Act, noting that even if mercury contained impurities, it would still be classified as mercury. The Revenue also referred to Note 10 to Chapter 28, stating that any treatment to render the product marketable amounts to manufacture.

The Tribunal, after hearing both parties, agreed with the Revenue's submissions. They noted that the appellant cleared the product as mercury only, even after using it in the manufacturing process. Therefore, the Tribunal held that the appellant could not claim the product to be waste for the purpose of excise duty. The Tribunal rejected the appeal, finding no merit in the appellant's arguments. The decision was based on the understanding that once the product is cleared as mercury, it cannot be considered waste for the purpose of excise duty liability.