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2009 (5) TMI 464 - AT - Central ExciseSulphuric acid- Notification No. 67/95- . The show cause notice has been issued on the ground that the appellant had manufactured Sulphuric Acid, the Sulphuric Acid has been captively consumed and the Benefit of Notification No. 67/95 is not available for the Sulphuric Acid captively used in the manufacture of the goods cleared without payment of duty under exemption. Since, the proviso to the said Notification clearly stipulates that the Notification shall not apply to inputs used in or in relation to the manufacture of final products which are exempt from the whole of excise leviable thereon and are chargeable to nil rate of duty. Held that- After purification, an Electrolysis process takes place and in the Electrolysis process Zinc is produced, which is the main product. That means, the Sulphuric Acid is used in the manufacture of Zinc. Zinc is a dutiable item and when the Zinc Sulphate is subjected to Electrolysis process, Sulphuric Acid is formed. This is actually a by-product. A part of it is cleared for use of fertilizer. Thus, it is clear that the department s contention that Sulphuric Acid is used in the generation of Sulphuric Acid is not correct. Sulphuric Acid is captively consumed in the manufacture of Zinc, which is a dutiable item. Therefore, there is no substance in the denial of the benefit of Notification 67/95 to the Sulphuric Acid captively consumed. Hence, the original order itself is not correct. The appellants are rightly entitled for the benefit of Notification 67/95 in respect of Sulphuric Acid captively consumed. Therefore, the impugned order which upholds the original order is also not correct. Thus, we allow the appeals with consequential relief.
Issues:
- Interpretation of Notification 67/95 regarding exemption eligibility for Sulphuric Acid captively consumed in manufacturing process - Clarity on the duty payable for Sulphuric Acid used in the manufacture of final products cleared without payment of duty - Confusion in the Commissioner (Appeals) order regarding the issue at hand Analysis: The case involved an appeal against Orders-in-Appeal passed by the Commissioner of Customs and Central Excise, Visakhapatnam. The appeal revolved around the eligibility of Sulphuric Acid, captively consumed in the manufacturing process, for exemption under Notification 67/95. The show cause notice raised concerns about duty payment on Sulphuric Acid used in the production of goods cleared without duty payment for fertilizer manufacturing. The Adjudicating Authority confirmed the duty demand, leading to an appeal by the appellants. The Commissioner (Appeals) upheld the order but displayed confusion in identifying the core issue. The Tribunal highlighted the discrepancy in the Commissioner's understanding, emphasizing that the issue was solely about duty payment for Sulphuric Acid captively consumed, not about cenvat credit on inputs. The Tribunal, after careful review, concluded that the Sulphuric Acid was rightfully entitled to the exemption under Notification 67/95 due to its use in the manufacture of dutiable Zinc. The department's argument, based on Sulphuric Acid's clearance for fertilizer manufacturing, was deemed incorrect. Consequently, the Tribunal allowed the appeals, granting relief to the appellants. The manufacturing process involved converting Zinc concentrate into Zinc Oxide, then Zinc Sulphate using Sulphuric Acid, with a portion of Sulphuric Acid captively consumed for Zinc production. The remaining Sulphuric Acid was cleared without duty payment for fertilizer manufacturing. The Tribunal clarified that the Sulphuric Acid's use in Zinc production, a dutiable item, qualified it for the Notification 67/95 exemption. The department's contention that Sulphuric Acid was used in generating more Sulphuric Acid for non-duty paying purposes was dismissed. The Tribunal deemed the original order, upheld by the Commissioner (Appeals), incorrect, as the Sulphuric Acid was rightfully exempt from duty payment. The judgment, delivered in 2009, emphasized the correct interpretation of the exemption notification and the specific issue of duty payment for Sulphuric Acid captively consumed in the manufacturing process.
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