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TMI Blog2006 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... Part of sulphuric acid so produced is removed on payment of central excise duty and the remaining is supplied to industrial manufacturers (without payment of duty) under Chapter X procedure. While this is the disposal of the sulphuric acid (by-product), copper produced is smelted into copper cathode (final product) and is cleared on payment of duty. The appellant had taken modvat credit on copper concentrate and was using that credit for the purpose of discharging central excise duty on copper cathode as well as sulphuric acid. 2. Under the impugned order, it has been held that Rule 57CC is attracted in regard to supply of sulphuric acid under Chapter X procedure since the supplies are duty free and appellant is liable to pay 8% of the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the legal position. Rule 57C states that no "No credit of the specified duty shall be allowed on such quantity of inputs which is used in the manufacture of final products which are exempt from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty." In the present case, revenue authorities are treating clearance of sulphuric acid under Chapter X procedure as clearance of exempt final product. Demand has been made in terms of Rule 57CC (1) pursuant to this finding that final product is exempt. That Rule states that "Where a manufacturer is engaged in the manufacture of any final product which is chargeable to duty as well as in any other final product which is exempt from the whole of the duty of excise le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctness of the construction of exemption notification does not mean that the full effect to the exemption notification should not be given by any circuitous process of interpretation. After all, exemption notifications are meant to be implemented and trade notices in these matters clarify the stand of the Government for the trade. It is clear, therefore, that the Tribunal failed to interpret the words of the exemption Notification No. 201/79 properly and fully. The said notification exempted all excisable goods on which the duty of excise was leviable and in the manufacture of which any goods falling under Tariff Item 68 (i.e. inputs) had been used from so much of the duty of excise leviable thereon as was equivalent to the duty of excise al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , namely, polyester fibre were not wholly exempt from duty or chargeable to nil rate of duty. It cannot be read in the notification that the notification would not be available in case non-excisable goods arise during the course of manufacture. In fact, the Tribunal seems to have erred in not bearing in mind that exemption notification was pressed in service in respect of polyester fibre which is excisable goods and not in respect of methanol which arises as a by-product as a part and parcel of chemical reaction. It appears further on a comparison of the Rule 56A and the Notfn. No.201/79 that these deal with the identical situation. The submission of the learned counsel is that the observation of the Apex Court in regard to ethylene glycol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this Tribunal in the case of Binani Zinc Ltd. vs. C.C.E., Cochin - 2005 (70) RLT 355 (CESTAT-Ban.)=2005 (187) ELT 390 and in Indian Iron & Steel Co. Ltd. vs. C. C.E., Bolpur - 2002 (50) RLT 83 (CEGAT-Kol.)=2002 (141) ELT 695 in support of his contention. 8. It is to be firstly noted that Rule 57CC (1) is attracted only where two final products, one dutiable and the other non-dutiable are produced from the same modvated input. Similarly, occasion for varying Modvat credit taken on inputs arises under Rule 57C only where input is used in the manufacture of exempted final product. The position of by-product in the proforma credit scheme came up for consideration before the Apex Court in the case of Swadeshi Polytex Ltd. relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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