2016 (9) TMI 1098 - AT - Central Excise

Whether Appellant is required to discharge an amount under Rule 6(3)(1)(b) of the Cenvat Credit Rules, 2004 with respect to value at Spent Sulphuric Acid supplied by the Appellant under Notification No.6/2006-CE dated 01.03.2006 at NIL rate of duty - Held that - by respectfully following the ratio of various case laws relied upon by the appellant that the CENVAT credit cannot be denied, nor the penalty can be imposed on the clearance of Spent Sulphuric Acid , as it is not a final product, which is manufactured along with Acid Slurry , attracting duty at 8% under Rule 57CC of the Central Excise Rules, 1944. Rule 57CC of the erstwhile Central Excise Rules, 1944 is comparable to Rule 6(3)(1) of the Cenvat Credit Rules, 2004. - Decided in favour of appellant

Summary

Issues:
1. Whether the Appellant is required to discharge an amount under Rule 6(3)(1)(b) of the Cenvat Credit Rules, 2004 with respect to value at Spent Sulphuric Acid supplied by the Appellant under Notification No.6/2006-CE dated 01.03.2006 at NIL rate of duty.

Analysis:
The Appellant, engaged in manufacturing Acid Slurry, faced an issue regarding the duty payment for Spent Sulphuric Acid supplied under a notification. The Appellant argued that they clear Spent Sulphuric Acid on duty payment when not availing the notification benefit. The case law references provided by the Appellant supported their stance, highlighting similar favorable decisions by various courts and tribunals. The Revenue contested, emphasizing the lack of separate accounts for inputs used in dutiable and exempted goods. However, the Appellate Tribunal noted that the issue had been decided in favor of the assesses in previous cases.

In a specific case reference, the Allahabad High Court held that Spent Sulphuric Acid, being a by-product in the manufacturing process of Acid Slurry, does not attract the duty under Rule 57CC of the Central Excise Rules, 1944. The Court explained the process where LAB and Sulphuric Acid are mixed to produce Acid Slurry, with Spent Sulphuric Acid emerging as a by-product cleared separately. The Court emphasized that the duty payment obligation does not extend to Spent Sulphuric Acid, which is not a final product but a by-product cleared under specific procedures.

The Tribunal concurred with the legal interpretation of the case laws and the Allahabad High Court's decision, allowing the Appeals filed by the Appellant. It was established that the duty liability under Rule 6(3)(1)(b) of the Cenvat Credit Rules, 2004 does not apply to Spent Sulphuric Acid, considering its nature as a by-product in the manufacturing process of Acid Slurry. Therefore, the Appellant was not required to discharge any additional amount under the mentioned rule for the clearance of Spent Sulphuric Acid, especially when not availing the duty exemption notification.

This comprehensive analysis of the judgment showcases the legal intricacies involved in determining the duty liability for a by-product in the context of specific notifications and rules governing excise duties. The reliance on past case laws and the interpretation of relevant provisions played a crucial role in resolving the issue in favor of the Appellant.