9911796707
TMI Blog2006 (3) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... rom payment of duty as fertilizers. The Commissioner's recording in Order-in- Original from Para 3 to 9 is reproduced herein below. 3. In the process of manufacture of the final products as well as the other products, water treated with chemicals is used and the assessee is availing Cenvat credit on the chemicals used for water treatment. They filed a declaration dated 13-8-97 under Rule 57-G of Central Excise Rules, 1944 declaring certain chemicals used for water treatment as inputs in relation to the manufacture of their final products of Chapter 72. They have not declared "Ammonium Sulphate" among the final products in relation to use of these chemicals for treatment of water, therefore, it implied that the chemically treated water is used in the manufacture of products under Chapter 72 only and not Ammonium Sulphate. However, on verification, it has been found that the assessee has been utilising the water, treated with chemicals, in the Ammonium Sulphate plant and they are not maintaining any separate inventory/record for accounting for the quantity of chemicals used in the water that goes into the Ammonium Sulphate plant. The assessee is also utilizing electricity in Ammoniu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ammonium Sulphate, which is cleared at nil rate of duty. They are also not maintaining any separate inventory/record ac counting for the amount of chemicals used in the water that is utilized in the Ammonium Sulphate plant and the quantity of Electricity used in the Ammonium Sulphate plant. Hence as per Rule 57CC(1), the assessee is required to pay 8% of the price of Ammonium Sulphate cleared. 8. The particulars of the clearances of Ammonium Sulphate for the five years 1995-96 to 1999-2000 are as under: SI No. Year Quantity (Mt) Value (Rs.) 1. 1995-96 33050.15 104280530 2. 1996-97 38586.636 114156387 3. 1997-98 34049.387 107896315 4. 1998-99 18552.301 60195000 5. 1999-2000 11535.795 43899011 TOTAL 135774.269 430427243 The assessee in their letter No.VSP/FIN/52/Central Excise/096, dated 21-2-2001 stated that they have not availed Modvat credit on any of the water treatment chemicals upto March, 1997. Hence, the assessee is liable to pay duty @ 8% under Rule 57CC for the clearances of Ammonium Sulphate from 1997-98 to 2000-2001. With effect from 1-4-2000, new Cenvat Rules have come into force. Earlier Modvat Rule 57CC is replaced by Cenvat Rule 57AD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from excise duty or not. (d) In an Integrated Steel Plant, the final product is Iron and Steel and Ammonium Sulphate gets produced only because of the fact that the coke oven gas cannot be let-into air as it contains Ammonia which is very hazardous to the environment. The coke oven gas is recovered in the form of Ammonia gas which is highly corrosive in nature. Without extracting ammonia from the coke oven gas, the CO gas cannot be used in the manufacture of Iron and Steel products. Thus VSP is under compulsion to product Ammonium Sulphate. To a large extent it can also be stated as a pollution control unit. (e) VSP wishes to submit that it is appropriate that the manufacturers are allowed to reverse the proportionate credit attributable to the inputs used in the manufacture of the exempted product. This is in line with the decision of the Supreme Court in the case of Chandrapur Magnets (1990 (81) E.L.T. 3 S.C.) wherein it was held that reversal of credit amounts to non-availment. (f) Under Rule 57CC(5)/57AD2(a)(iv)/Rule 6(3) (applicable to items f under specific tariff heading) a manufacturer using Modvat/Cenvat inputs in the manufacture of final product which is exempted fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept their plea and recorded the findings in Paras 14 and 15 as follows. 14. I have carefully gone through the case records. On facts, there is no dispute that water treated with chemicals on which Modvat/Cenvat credit had been taken, has been used in the manufacture of Ammonium Sulphate cleared at nil rate of duty under exemption. The issue is, however, disputed on merits. Their contention is that the total credit of Rs. 4,534/- availed on chemicals used in the treatment of water which was used in the manufacture of Ammonium Sulphate during the period 1997-98 to 2001- 2002 was already reversed by them. Similarly, the total credit attributable to use of electricity in the manufacture of Ammonium Sulphate during the same period, is Rs. 23,939/- which has also been reversed. Their contention, in short, is that there is no case for demand under Rule 57CC/57AD of the Central Excise Rules and under Rule 6 of the Cenvat Credit Rules, 2001/2002. 15. The assessee, in this case, has admitted that they are not maintaining separate records for the inputs. They have stated that Ammonium Sulphate is produced by tapping oven gas which contains ammonia as a pollution control measure. Without ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (144) E.L.T. 447; CCE v. Laxmi Agro Industrial Consultants and Exporters Ltd. reported at 2004 (178) E.L.T. 924; CCE v. Rama Industries Ltd., reported at 2004 (178) E.L.T. 720; Hindustan Zinc Limited v. CCE reported at 2004 (178) E.L.T. 255. 5. The learned DR contended that the Commissioner had taken a view that Ammonium Sulphate was removed at nil rate of duty. Although they reversed appropriate credit, they are required to reverse the entire credit in a case where the assessee has failed to maintain separate accounts, therefore, the confirmation of demand is justified. 6. On a careful consideration, we notice that the assessee was using common inputs. The Ammonium Sulphate is only a by product and the same was produced as a pollution control norms and in an integrated plant, the final product is iron and steel on which duty has been discharged. Rule 57CC/57AD/Rule 6 which prescribes maintenance of separate accounts of the receipt and use of inputs or payment of 8% would not arise in the present case as contended by the assessee, as it would arise only to the final products, where records are maintain able but not applicable to the byproducts. This view has been confirmed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
