Central Excise - Admissibility of Modvat credit on Sulphuric Acid used in the manufacture of detergent powder - Clarification regarding - Central Excise - 33/88

Central Excise - Admissibility of Modvat credit on Sulphuric Acid used in the manufacture of detergent powder - Clarification regarding Circular No. 33/88 Dated 29-7-1988 F. No. 267/56/88-CX.8 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Central Excise - Admissibility of Modvat credit on Sulphuric Acid used in the manufacture of detergent powder - Clarification regarding. Doubts have been raised whether Modvat credit would be admissible on entire quantity of concentrated Sulphuric Acid used in the manufacture of detergent powder. This is so because a part of sulphuric acid is obtained as spent sulphuric acid during the process of manufacture and this spent sulphuric acid can be used as sulphuric acid in the manufacture of fertilizers and other products. The matter was referred to Chief Chemist. He has opined that spent sulphuric acid is a by-product which is obtained when Alkyl Benzene is sulphonated by a strong sulphuric acid or oleum. When water is added to this mass, sulphuric acid layer is separated from the acid slurry and results in what is called as the 'spent sulphuric acid'. Chief Chemist is of the view that spent sulphuric acid cannot be charged to duty again as it is not a manufactured product. This matter has been examined by the Board keeping in view the opinion of the Chief Chemist. Modvat credit is admissible on concentrated sulphuric acid when used in the manufacture of Organic Surface Active Agents. Spent Sulphuric acid cannot be treated as regenerated sulphuric acid and thus is not a manufactured product. Board has, therefore, decided that spent acid is not a manufactured product and therefore would not be chargeable to duty again. The Modvat credit should be restricted to the duty element on the concentrated sulphuric acid actually consumed in sulphonation reaction. This can be arrived at by deducting the duty equivalent of spent acid from the duty paid on concentrated sulphuric acid or oleum initially charged. The above instructions may be brought to the notice of the field formations.