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TMI Blog2018 (2) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... d taken to lead refinery, to obtain lead ingots. Silver emerges in the process of refining - the input to the Pyro-metallurgical process is zinc and lead concentrate. In the first part of the process, Zinc is recovered and in the second part, lead is recovered along with the by-product silver - the silver in the present case has indeed emerged in the process of manufacture of zinc by smelting. Accordingly, the appellant will be entitled to the benefit granted by Rule 6(6) (vi) of the CCR, 2004 - appeal allowed - decided in favor of appellant. - Appeal No. E/52695, 52396, 52397/2015-EX ( DB ) - Final Order No. 50401-50403/2018 - Dated:- 1-2-2018 - Hon ble Justice Dr. Satish Chandra, President And Hon ble Mr. V. Padmanabhan, Member ( Tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process. The technology employed in the former process does not produce any silver and has not been disputed. The latter process is a three-stage process, whereby zinc and lead both are extracted from the combined mixture of zinc concentrate, lead concentrate and bulk concentrate. The three stages in this process are Sinter Plant, Imperial Smelting Furnace and Refineries. 4. The Pyro-metallurgical process starts with the feeding of zinc concentrate, lead concentrate and bulk concentrate, in specified proportion, in the Sinter Plant where Sulphur is removed from the concentrates to obtain zinc oxide and lead oxide and agglomerates the product into porous, high strength lumps, called sinter. The hot sinter is charged into the Imperial Smel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Revenue. 9. Shri Amit Jain summarized the arguments of the appellants i. The dispute pertains to the Silver which is recovered as a by-product in the course of Pyro-metallurgical process which is used by the appellant in his factory to manufacture zinc and led. The silver emerges as a by-product and is cleared without payment of duty. Revenue has taken the view that it is an exempted final product incurring mischief of Rule 6 of the Cenvat Credit Rules, 2004. Accordingly, the appellant has been directed to pay the amount in terms of Rule 6 (3). ii. He submitted that silver is not an item which is manufactured by the appellant but which emerges as a by-product incidentally on account of technical process. He submitted that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as a manufacture product along with zinc and lead and consequently the mischief of Rule 6 of the Cenvat Credit Rules, 2004 will be incurred and the appellant will be liable to reverse the Cenvat Credit attributable to inputs/input services used in silver. He further argued that the investigation undertaken by the department has established that silver is arising during the metallurgy of lead and therefore the provision of Rule 6 (6)(vi) of the Cenvat Credit Rules is not applicable. He also sought to differentiate the case law relied upon by the appellant. In that connection he submitted that the CESTAT s order pertains to the period April, 2002 to Feb, 2003 when only a small quantity of silver was being manufactured. However, after 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, silver. The said silver is extracted as a by-product by the respondent whose intended/main manufacturing process is aimed at manufacture of non-ferrous metal like zinc and lead. The respondent also obtain various other by-products like sulphuric acid etc. In fact with reference to sulphuric acid emerging as a by-product, it was held in the respondent s own case that there is no need for reversal of Cenvat credit on proportionate basis in Hindustan Zinc Limited vs. CCE, Jaipur II reported in 2004 (178) E.L.T. 255 (Tri. Del.). Reference can also be made to the decision of Hon ble Supreme Court in respondent s own case reported in 2014 9 EX/59850 of 2013 (303) E.L.T. 321 (S.C.). The Hon ble Supreme Court observed as below :- 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proportionate credit attributable to the quantum of inputs that could be considered as used in the manufacture of silver. The quantity based proportion calculated 10 EX/59850 of 2013 by the respondent is now being contested by the Revenue. The plea is that the final product value should form basis of such proportion. As already noted, we find no legal basis for such contention by the Revenue. 13. Observation of the Tribunal as above is very much applicable to the subsequent period also. The Ld. DR has attempted to differentiate the above case as pertaining to the period prior to the installation of the present smelting furnace but we are of the view that the ratio of the Tribunal is equally applicable for the subsequent period si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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