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TMI Blog2004 (11) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... esh producing, inter alia, sulphuric acid. During the manufacture of the said acid, waste material arises which is called Scrubber Liquor . This liquor contains sodium silicate and soda ash in small quantities; but for the presence of these items it is only water. Scrubber liquor is a pollutant. Therefore, its disposal is covered by Pollution Control Orders. Disposal also involves expenditure. 3. In and around Chhindwara are located some units engaged in the manufacture of sodium silicate. The manufacture of sodium silicate is water intensive. Water is required to be added to adjust the viscosity of sodium silicate. The scrubber liquor, though normally a polluting material, can safely substitute for water in the case of sodium silicate. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing added to the selling price of sodium silicate, thereby causing undervaluation of sodium silicate and evasion of central excise duty. The Notices also alleged collusion between Hindustan Lever Ltd. and other parties in bringing about the duty evasion. 6. The appellants resisted the charges by contending that law permitted them to take credit of whatever duty was paid on inputs, since scrubber liquor was required for the production of sodium silicate. As regards valuation of sodium silicate, it was pointed out that its sale price is the full consideration for the sale and that excise duty is to be levied on the normal price/transaction value, irrespective of whether the transaction value included all the costs incurred in production. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat credit and duty demands, interest and imposition of penalty. 8. The contentions raised in the present appeals are the same as were taken before the lower authorities. Therefore, what is involved in these appeals is appreciation of issues from their factual and legal context. Denial of credit taken on scrubber liquor is on the ground that it cannot be considered as input. Order-in-Original No. 56/CX/JC/99 dated 16-12-99 passed by the Joint Commissioner of Central Excise in the case of M/s. Madan Chemicals states the following on the issue of Modvat credit: Thus, it is clear that scrubber liquor is neither a product which is necessary for manufacture of sodium silicate nor used in relation to manufacture of sodium silicate but added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not used in relation to manufacture, particularly, when the viscosity control is by the manufacturer before the sale of the goods. It is also to be noted that Modvat follows payment of duty on inputs, whether such payment of duty was correctly made or not. Correctness of payment is not relevant; only the fact of payment is. A view to the contrary also goes against the broad definition of manufacture in Section 2 of the Central Excise Act in a manner as to include any process - incidental or ancillary to the completion of manufacture [Section 2(f)(i)]- Thus, a finding that scrubber liquor is not an input is contrary to the given factual situation and relevant legal provisions. Modvat credit was correctly taken by the manufacturers of so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r assessment laid down in the valuation provisions under Central Excise law. Thus, the charge of undervaluation of sodium silicate and the consequent loss of revenue are also not well founded. 11. As stated above, the appeals deserve to succeed on merits. Therefore, it is not necessary to go into the question of limitation. All the same, it may be noted that finding, on this score is contrary to facts and circumstances of the case. Scrubber liquor was a pollutant waste. It was hard and expensive for Hindustan Lever to dispose of, till local buyers agreed to lift it. Earlier M/s. Hindustan Lever Ltd. was sending it at cost and risk to their manufacturing facility at faraway Mumbai. In such circumstances, when Hindustan Lever Ltd. gave away ..... X X X X Extracts X X X X X X X X Extracts X X X X
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