9911796707
TMI Blog2007 (11) TMI 276X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee) had cleared Lean Gas in bulk to M/s. Indian Petrochemicals Corporation Limited (IPCL), M/s. Vikram Ispat Ltd., and M/s. Ispat Industries as Natural Gas under Chapter Heading 2611.21 claiming nil rate of duty. In the said show cause notice, however, the allegation was based on the footing that Lean Gas was a by-product after due manufacturing process stood carried out on Natural Gas to extract LPG. We quote hereinbelow the relevant portion from the show cause notice, which reads as under: "However it is found that Lean Gas is a by-product after due manufacturing process on Natural gas to extract L.P.G. Hence Lean gas is a result of a manufacturing process and therefore attract provisions of rule 57CC of the Central Excise Rules, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the manufacture of capital goods as defined in Rule 57Q and such intermediate products or capital goods are not chargeable to duty of excise." 4. On the other hand, the Department contended that since Lean Gas was itself a final product, the assessee was not entitled to the benefit of Modvat credit under Rule 57CC of the said Rules. We quote hereinbelow Rule 57CC which referred to adjustment of credit if the final produce stood exempted. "Rule 57C Adjustment of credit on inputs used in exempted final products or maintenance of separate inventory and accounts of inputs by the manufacturer. - (1) 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing within Chapter 40; (c) Black and White television sets, falling within Chapter 85; and (d) Newsprint, in rolls or sheets, falling within Chapter heading No. 48.01; which are exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty. (5) In the case of final products referred to in sub-rule (3) or sub-rule (4) and excluded from the provisions of sub-rule (1), the manufacturer shall pay an amount equivalent to the credit of duty attributable to inputs contained in such final products at the time of their clearance from the factory. (6) The provisions of sub-rule (1) shall also not apply to final products which are exported under bond in terms of the provisions of Rule 13. (7) The provisions of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove issue for the simple reason that on the facts of the present case, as can be seen from the extract quoted from the show cause notice, which is the foundation of the Demand made by the Department, Lean Gas is a by-product which emerges when LPG is extracted from natural gas. If the case of the Department itself in the show cause notice was that Lean Gas is a by-product, then we fail to understand as to the basis for denying the benefit of Modvat credit to the assessee during the relevant period (October 1998 to January 1999) under Rule 57D. 7. As repeatedly held by this Court, show cause notice is the foundation of the Demand under Central Excise Act and if the show cause notice in the present case itself proceeds on the basis that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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