2015 (6) TMI 432 - AT - Central Excise

Duty demand under Rule 57CC - Emergence of hazardous waste emerges known as Mother Liquor during the process of manufacture of final product gelatin with the help of Hydrochloric acid - Held that - Decision in the case of appellant s own cases 2014 (5) TMI 253 - SUPREME COURT and 2008 (12) TMI 46 - HIGH COURT BOMBAY followed - Decided in favour of assessee.

Summary

Issues:
- Appeal against the adjudication Order of the Commissioner of Central Excise demanding and confirming an amount under Rule 57CC of the Central Excise Rules, 1944.
- Manufacturing of gelatin using Hydrochloric acid leading to the emergence of hazardous waste known as Mother Liquor treated with other chemicals and cleared without duty payment.
- Interpretation of Rule 57C, 57D, and 57CC of the Central Excise Rules, 1944 regarding credit of duty paid on inputs used in manufacturing dutiable and exempted final products.
- Applicability of Rule 57CC in cases where separate accounts of inputs used in manufacturing dutiable and exempted final products are not maintained.
- Dispute regarding the liability to pay presumptive amount under Rule 57CC for not maintaining separate accounts of inputs used in manufacturing exempted final products.

Analysis:
1. The appeal was filed against the adjudication Order demanding an amount under Rule 57CC of the Central Excise Rules, 1944. The case involved the manufacturing of gelatin using Hydrochloric acid, resulting in the production of hazardous waste known as Mother Liquor, which was cleared without duty payment. The dispute centered around the common input HCL used for manufacturing both dutiable and exempted products.

2. The Hon'ble Supreme Court had previously settled a similar issue in the appellant's case, emphasizing the credit of duty paid on inputs used in manufacturing dutiable final products. The High Court ruled that the manufacturer is entitled to avail the entire credit of duty paid on inputs, even if no excise duty is payable on the waste arising from the manufacturing process.

3. Rule 57CC was introduced to address situations where manufacturers fail to maintain separate accounts of inputs used in manufacturing exempted final products. The rule mandates a presumptive amount payment if separate accounts are not maintained. However, the High Court clarified that Rule 57CC does not apply if the waste arising from dutiable products is further processed into exempted final products.

4. The Hon'ble Supreme Court dismissed the Revenue's appeal, affirming the decision of the High Court. The judgment set aside the impugned order and allowed the appeal, citing the settled nature of the issue based on previous judicial decisions. The period involved in the present appeal differed from the Apex Court's order but was deemed identical in nature, leading to the decision in favor of the appellant.

5. The judgment highlighted the importance of maintaining separate accounts for inputs used in manufacturing different final products and clarified the application of Rule 57CC in cases where dutiable waste is processed into exempted final products. The decision provided clarity on the interpretation of relevant excise rules and upheld the appellant's entitlement to credit of duty paid on inputs used in manufacturing dutiable products.