1996 (11) TMI 236 - AT - Central Excise

Summary

Issues:
1. Admissibility of money credit on Ethyl Alcohol used in the manufacture of specified final products.
2. Classification of Solvent 75 and Paraldehyde as waste products or by-products.
3. Interpretation of Rule 57M of the Central Excise Rules.
4. Applicability of Notification 231/87 dated 1-10-1987 to the products in question.

Analysis:
The case involves a Reference Application filed by M/s. Somaiya Organics (India) Limited challenging the Tribunal's Final Order on various grounds related to the admissibility of money credit on Ethyl Alcohol used in the manufacture of specified final products. The main contention is whether the Tribunal erred in denying money credit on Ethyl Alcohol used in the production of Solvent 75 and Paraldehyde, which were not included in the schedule of Notification 231/87 dated 1-10-1987. The applicants argue that Rule 57M allows credit even if inputs are part of waste or by-products. They claim that Solvent 75 and Paraldehyde are waste products or by-products arising during the manufacture of specified final products and should be eligible for the credit. Additionally, they argue that Paraldehyde, obtained through the conversion of Acetaldehyde, a specified product, should also be eligible for the credit under the Notification.

The Tribunal's decision, based on a previous case, upheld the denial of money credit for Ethyl Alcohol used in the production of Solvent 75 and Paraldehyde. The Tribunal considered Solvent 75 and Paraldehyde as final products not specified in the Notification, thus ineligible for the credit. The Tribunal's decision was consistent with the earlier case where the admissibility of money credit on Solvent 75 was partially allowed due to its indeterminate composition. However, the credit for Paraldehyde was denied as it was considered a regular product and not a waste or by-product, as claimed by the applicants. Consequently, the Reference Application was partly allowed for Ethyl Alcohol used in Solvent 75 and dismissed for Paraldehyde.

The key issues revolve around the interpretation of Rule 57M regarding the admissibility of money credit on inputs used in the production of waste products or by-products. The dispute also concerns the classification of Solvent 75 and Paraldehyde as final products under the Notification and their eligibility for the credit. The case highlights the complexity of determining the applicability of excise rules and notifications to various manufacturing processes and the challenges in claiming benefits based on such interpretations. The Reference Application seeks clarification on the correctness of the Tribunal's decision regarding the denial of money credit for Ethyl Alcohol used in the manufacture of Solvent 75 and the classification of Solvent 75 as a final product rather than a waste or by-product under Rule 57M.