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TMI Blog2014 (9) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... Yarn falling under Chapter Sub-Heading 5403.32, Cellophane Films falling under Chapter Sub-Heading 3920.21, Surphuric Acid falling under Chapter Sub-Heading 2807.00 of Central Excise Tariff Act, 1985. Around fifteen periodical show cause notices were issued to the Respondent for the period from 01.08.1998 to 31.01.2006, alleging non-payment of Central Excise Duty on the Sulphuric Acid consumed captively, and also cleared without payment of duty against exemption Notification No.06/2002-CE dated 01.03.2002.The ld. Commissioner, after detailed discussion of the manufacturing process and the stage at which Sulphuric Acid emerges and its further utilization in the manufacture of Sulpuric Acid, concluded that the demand is not sustainable, as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, the said intermediate product ought to be held as excisable goods under Central Excise Act, 1944. 4. Advancing the case of the Revenue, the ld. AR for the Department submits that Sulphuric Acid (98% to 99% purity) in the Circulation Tank is capable of being marketed and hence ought to be considered as excisable goods, and consequently, is liable to excise duty when cleared out of factory without payment of duty, availing benefit of exemption either under Notification No.5/99-CE dated 28.02.99 or under Notification No.6/2002-CE dated 01.03.2002, as the case may be, observing Chapter X Procedure for its use in the fertilizer units/plants. In support, he has referred to the judgment of the Honble Supreme Court in the case of Medley Phar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 11. The points to be decided in the case are as to whether - (i) the assessee is liable to pay Central Excise duty on the quantity of Sulphuric Acid (98% concentration) manufactured by the assessee in the intermediate stage. On the face of the allegation that the same were used again at the intermediate stage for their final production of the same Sulphuric Acid which were in turn used captively without payment of duty on availing exemption under Notification No. 22/96-CE dated 23.07.1996 for use in their spin-bath for manufacture of filament yarn/ Rayon and cellophane films. (ii) the assessee is liable to pay excise duty on removal of Sulphuric Acid so manufactured by them availing exemptions under Notification No. 5/99 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circulation Line, Acid Concentration Meter is installed which monitors and senses the acid strength and automatically adjusts the water addition rate. On attainment of the desired strength, the Sulphuric Acid is transferred, with the help of a valve, from Circulation Tank to the Final Storage Tank. Prior to removal to the Final Storage Tank the material is only at a continuous in-process stage. Sulphuric Acid at the plants of almost all other manufacturers is also manufactured in the same manner. It is only at the final stage that Sulphuric Acid of the required concentration is transferred to the Storage Tanks. The said circulating Acid is nothing else but an intermediate stage due to the acid continuously getting accumulated into Circulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... again in the form of cycle and the same cycle goes on continuously. Thus the circulation tank is not the final stage of storage of Sulphuric Acid. It is a part of the total plant in the manufacturing process. After completion of the manufacturing process on attainment of finality by the Double contract process in the manufacturing tank (including the circulation tank) the Sulphuric Acid so manufactured is removed with the help of a valve to the final storage tank from where no portion of Sulphuric Acid is used in the manufacturing system. From the storage tank Sulphuric Acid is cleared for use in fertilizer manufacturing units and is also captively consumed for manufacture of filament yarn and cellophane. The Sulphuric Acid contained in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence not excisable. 6.4. We find that in recording the conclusion that Sulphuric Acid in the Circulation Tank, is not liable to duty, the adjudicating Commissioner has reasoned that there was manufacture of one product only, namely, Sulphuric Acid at the final stage, and also observed that the proposal to recover duty at two different stages - one at the intermediate stage, and thereafter, at the final stage, is incorrect, as there was no manufacture of any new excisable commodity at the intermediate stage, which is in the Circulation Tank and used repeatedly in the manufacture of Sulphuric Acid only. He also observed that Sulphuric Acid remains Sulphuric Acid at both intermediate and final stages, thereby, falling under the same Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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