2009 (5) TMI 502 - AT - Central Excise

Cenvat Credit / Modvat Credit Capital goods exclusively use in manufacture of exempted product Held that - Ammonium Sulphate Plant is not a plant exclusively used for manufacturing Ammonium Sulphate but is a plant which is required for the manufacture of Iron and Steel products, as this Ammonium Sulphate Plant dissolves hazardous chemicals, toxic and junk gases emanating from Coke Oven Plant, before the Coke oven gas can be used in the manufacture of final products. We find that the said Ammonium Sulphate plant is used for separating ammonia gas and the Ammonium Sulphate gets separated out as a by product. It is on record that the said Ammonium Sulphate is cleared on payment of duty to one of the customers viz. M/s. Hindustan Zinc Limited. decided in favor of assessee credit allowed

Summary

The appellate tribunal CESTAT, Bangalore, consisting of Members T.K. Jayaraman and M.V. Ravindran, heard an appeal against an order passed by the Commissioner of Customs and Central Excise (Appeals), Visakhapatnam. The dispute revolved around the availing of Modvat credit on capital goods used in the manufacture of Ammonium Sulphate, an exempted product. The Respondent had already reversed the credit before the Show Cause Notice was issued. The Deputy Commissioner confirmed the demand for recovery and imposed penalties. However, the Commissioner (Appeals) set aside the order, allowing the credit. The Revenue appealed to the tribunal, arguing that the Respondent was not eligible for Cenvat credit on capital goods used in the production of Ammonium Sulphate. The Respondent contended that the machinery was not exclusively used for exempted goods and cited relevant tribunal decisions. The tribunal found that the Ammonium Sulphate Plant was used for manufacturing Iron and Steel products and that the Respondent had cleared Ammonium Sulphate on payment of duty. Relying on a judicial pronouncement, the tribunal upheld the Commissioner (Appeals)'s decision, rejecting the Revenue's appeal. The operative portion of the order was pronounced on April 30th, 2009.