2007 (9) TMI 343 - AT - Central Excise

Whether the decision, in Rallis India Ltd. v. CCE, Salem, can be followed as binding precedent - Whether Rule 57CC is applicable to a manufacturer of excisable final product and excisable by-product - one dutiable and the other exempted - where both are manufactured intendedly and common inputs are used in or in relation to the manufacture of both the goods? - Obviously, the copper contained in the ore viz. copper-iron sulphide has emerged as the final product viz. copper anodes, while sulphur which was present in chemical combination with the metals in the ore has been converted ultimately into its oxyacid viz. sulphuric acid (H2SO4). Hence it cannot be gainsaid that copper concentrate is common input for copper anodes and H2SO4. - we are of the view that it should be dealt with by the regular Bench as and when the Hon ble High Court s decision in the department s appeal against the Tribunal s final order in the assessees earlier case becomes available. - Thus, while the input (hydrochloric acid) considered in Rallis India case was not a common input for the dutiable final product and the exempted by-products, the copper concentrate in the present case is a common input for the dutiable final product and the exempted by-product. The two cases are clearly distinguishable on facts. Therefore, we hold that the decision of the Larger Bench in Rallis India case cannot be considered to be a precedent for the present case.

Issues Involved:
1. Whether the decision in Rallis India Ltd. v. CCE, Salem, 2007 (208) E.L.T. 25 (Tri-LB) can be followed as a binding precedent.
2. Whether Rule 57CC is applicable to a manufacturer of excisable final product and excisable by-product - one dutiable and the other exempted - where both are manufactured intendedly and common inputs are used in or in relation to the manufacture of both the goods.

Issue-wise Detailed Analysis:

1. Binding Precedent of Rallis India Ltd. v. CCE, Salem:
The Tribunal was tasked with determining if the decision in Rallis India Ltd. could be followed as a binding precedent. The appellant argued that Rule 57CC applied to by-products sold without duty, making them final products for the purposes of the rule. The appellant cited various cases, including Indian Iron & Steel Co. Ltd. and Binani Zinc Ltd., to support their position that Rule 57CC applies to by-products. Conversely, the respondent contended that the decision in Rallis India was not applicable due to differing facts and prior inconsistent rulings, such as Shakumbari Sugar & Allied Industries Ltd. and Hindustan Copper Ltd. The Tribunal concluded that the facts in Rallis India, where hydrochloric acid was not a common input for dutiable and exempted products, were distinguishable from the present case where copper concentrate was a common input. Therefore, the decision in Rallis India could not be considered a binding precedent for this case.

2. Applicability of Rule 57CC:
The Tribunal examined whether Rule 57CC was applicable when common inputs were used for both dutiable and exempted products. The appellant argued that copper concentrate was a common input for both copper anodes (dutiable) and sulfuric acid (exempted), thus invoking Rule 57CC. The respondent countered that sulfuric acid was a by-product and not a final product, invoking Rule 57D which allows Modvat credit on inputs contained in by-products. The Tribunal reviewed the process of manufacturing copper anodes and sulfuric acid from copper concentrate and found that copper concentrate was indeed a common input for both products. This contradicted the earlier decision in Sterlite Industries Ltd. v. CCE, where it was held that copper concentrate was only an input for copper anodes. The Tribunal found merit in the appellant's argument and held that Rule 57CC was applicable, as the common input (copper concentrate) was used in the manufacture of both dutiable and exempted products.

Conclusion:
The Tribunal concluded that the decision in Rallis India Ltd. v. CCE could not be followed as a binding precedent due to differing facts. It also held that Rule 57CC was applicable to the present case, as copper concentrate was a common input for both dutiable and exempted products. The matter was referred back to the regular Bench for further proceedings, pending the High Court's decision in the department's appeal against the Tribunal's earlier order in the respondent's case.

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