9911796707
TMI Blog2000 (3) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... yl Chloride, Sodium Cyanide, Triethylamine Sodium Hypochloride and Caustic soda. Phenyl Acetic Acid is manufactured by reacting Benzyl Cyanide manufactured within the factory with Sulphuric acid procured from outside. Benzyl Chloride used in the manufacture of Benzyl Cyanide and Benzyl Cyanide used in the manufacture of Phenyl Acetic Acid were being cleared without payment of duty under Notification No. 176/86 and No. 217/86 dated 1-3-1986 and No. 246/86. Phenyl Acetic Acid was cleared at nil rate of duty under Notification No. 147/84-C.E., dated 18-6-1984. Exemption to interim products used captively is available under Notification 176/84 and No. 217/86 only if the final product is cleared on payment of duty. Therefore, it appeared to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oportionate quantity of Benzyl Cyanide in respect of aqueous layer as by-product and confirmed duty demand on entire quantity of Benzyl Cyanide used as reactant for manufacture of Phenyl Acetic Acid which is cleared at nil rate of duty. He also held that duty demand has been correctly computed and also denied benefit of Modvat credit claimed by the assessees. The Collector (Appeals) upheld the order of the Assistant Collector except in relation to the claim for Modvat credit which he remanded for fresh decision to the Assistant Collector by passing a speaking order. Hence this appeal. 3. The learned Consultant Shri R. Swaminathan states that identical issues in the case of the same assessees arose in E/A No. 462/91 and against order-i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his contention. 5. The prayer is opposed by the learned DR who submits that clearance of aqueous layer on payment of Excise duty is not material for considering the benefit of exemption under Notification No. 217/86, that the Bharat Petroleum judgment is not applicable in the context of exemption from Central Excise duty and that in any event, the benefit of Notification 217/86 cannot be extended to the entire quantity of Benzyl Cyanide used in the manufacture of both Phenyl Acetic Acid and Aqueous layer since admittedly Phenyl Acetic Acid is cleared by availing exemption from duty. 6. We have carefully considered the rival submissions. In the case of the same assessee, the Tribunal has extended the benefit of Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held to be immaterial, although in the case of Bharat Petroleum, refined kerosene was also taxable for nine months and in the case of Pulgaon Cotton Mills, yarn was also manufactured and it was subject to tax. In this background, the Supreme Court held that the type of use with which it was concerned in that case, is a composite one in which it is not possible to co-relate any part of the purchased goods as having gone in for the purpose of manufacture of taxable goods and that the entire sulphuric acid purchased by Bharat Petroleum Corporation has gone into the composition of acid sludge which was an independent commercial commodity with market value and was taxable and therefore, Bharat Petroleum Corp. was entitled to set-off of the entir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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