2012 (10) TMI 138 - HC - Central Excise

Demand of Excise duty on value/price of the by-product namely Spent Acid cleared - while availing benefit of exemption under Notification No. 6/2002-C.E. Held that - Assessee in the process of manufacturing soap uses acid slurry and in the process Spent sulphuric acid gets generated as a bye product demand set aside in favor of assessee

Summary

Issues:
1. Interpretation of Rule-6 of Cenvat Credit Rules, 2004 regarding payment of Excise duty on by-products.
2. Validity of Tribunal's non-speaking order without discussing facts.

Interpretation of Rule-6 of Cenvat Credit Rules, 2004 regarding payment of Excise duty on by-products:
The High Court considered the appeal against the CESTAT judgment regarding the requirement to pay Excise duty on by-products under Rule-6 of Cenvat Credit Rules, 2004. The court referred to previous judgments and opined that CENVAT credit is admissible for inputs used in the manufacture of dutiable goods, not exempted goods. The court emphasized the need for separate accounts for exempted goods and final products. In a specific case of gelatin production, the court concluded that when the entire quantity of input is used in manufacturing dutiable goods, maintaining separate accounts or paying a percentage of the total price of exempted goods is not necessary. The court highlighted that if no input is specifically used for producing the by-product, separate accounts are not required. The court dismissed the appeal, stating that even though the products were different, the legal principle applied to the case where soap production generated a by-product, spent sulphuric acid.

Validity of Tribunal's non-speaking order without discussing facts:
The High Court addressed the issue of whether the Tribunal was entitled to pass a non-speaking order without discussing facts. The court noted that a Division Bench had previously considered a similar legal issue in a different case involving a by-product. The court emphasized the importance of legal principles and application rather than the specific products involved. The court found that the Tribunal did not commit any error in its decision against the revenue and dismissed the tax appeal.

In conclusion, the High Court upheld the Tribunal's decision regarding the interpretation of Rule-6 of Cenvat Credit Rules, 2004 and the validity of the non-speaking order without discussing facts. The court emphasized the need for separate accounts for exempted goods and dutiable goods based on the specific inputs used in manufacturing processes, even when different products are involved.