2000 (1) TMI 364 - AT - Central Excise

Summary

Issues:
Classification of spent acid under the Tariff - Correct classification under chapter heading 28.07 or 38.23.
Availability of Modvat credit on sulphuric acid used in the manufacturing process of spent acid.

Analysis:

Issue 1: Classification of spent acid under the Tariff
The case involved a dispute over the correct classification of spent acid obtained during the manufacturing process. The appellant argued that spent acid should be classified under heading 28.07 instead of 38.23. The appellant relied on the Board's instruction and chapter notes to support their classification. It was noted that spent acid is essentially diluted sulphuric acid, falling within a concentration range of 51% to 60%. The absence of concentration specifications in chapter heading 28.07 led to the conclusion that any concentration of sulphuric acid should be classified under this heading. The judgment emphasized that separately defined chemicals under chapters 28 or 29 cannot be classified under chapter 38, as per chapter notes. Consequently, the impugned order was set aside, and the order of the Assistant Collector was restored based on the correct classification under heading 28.07.

Issue 2: Availability of Modvat credit on sulphuric acid
The Tribunal's decision focused on the availability of Modvat credit on sulphuric acid used in the manufacturing process of spent acid. The Collector's order primarily addressed the Modvat credit availed under rule 57F (iii) of the Central Excise Rules. It was clarified that the demand notices issued did not pertain to the classification issue but specifically related to the recovery of wrongly availed Modvat credit and penalty imposition. The judgment highlighted that the dispute regarding the correct classification of spent acid had been resolved previously by the Tribunal and CBEC Circulars. Both the Tribunal's order and the Circulars supported the appellant's entitlement to full Modvat credit on sulphuric acid used in the manufacturing process, irrespective of the by-products generated. The judgment upheld the appellant's claim for full Modvat credit based on the clear discussions and findings, rejecting the grounds raised by the JDR. Consequently, the appeal was rejected, affirming the appellant's right to the full Modvat credit on sulphuric acid utilized in the manufacturing process.

In conclusion, the judgment resolved the issues related to the classification of spent acid under the Tariff and the availability of Modvat credit, providing clarity on the correct classification under heading 28.07 and affirming the appellant's entitlement to full Modvat credit on sulphuric acid.