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TMI Blog2023 (6) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Sulphur present in the concentrate reacts with the oxygen to form Sulphur Dioxide. The Sulphur Dioxide is separated and again reacted with oxygen separately with the catalyst to form Sulphur Trioxide. The Sulphur Trioxide thus obtained is further absorbed with Sulphur Acid and Water to get concentrate Sulphuric Acid. The Sulphuric Acid produced is cleared by the appellant as final product at nil rate of duty under Notification No. 12/2012 dated 17.03.2012 for further manufacture of fertilizer. 2. It has been contention of the department that since the final product namely Sulphuric Acid is exempted from Central Excise Duty, the appellant should have discharged the duty on their intermediate product namely oxygen gas which is captively consumed by them. The department contended that exemption Notification No. 67/95- CE dated 16.03.1995 is not available to the oxygen gas since the same is used in the manufacture of exempted Sulphuric Acid. 3. Thus, the show cause notice was issued for the period December, 2008 to November,2013 demanding Central Excise Duty of Rs. 25,70,98,060/-. Further periodical show cause notices were also issued which got adjudicated. The details of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in the proceedings, we find that the appellants have set up a plant only for manufacture of final product copper anode from the imported copper concentrate. It is seen that Oxygen is one of the essential inputs for conversion of Copper Concentrate into Copper Anode and it is used in the furnace and in the smelter converter to remove impurities contained in the copper concentrate. In the process of purification, sulphur dioxide SO2 emerges out as waste gas. However, due to stringent conditions imposed by the Environment Ministry, the sulphur dioxide cannot be let off by the industries. As per Environment (Protection) Rules, 1986, it is a mandatory requirement of appellant unit to process the harmful gases without letting out in the atmosphere. Further, as evident from their reply to SCN before adjudicating authority that oxygen is so generated in the plant is captively consumed only in the process of conversion of copper concentrate to copper anode and not in the manufacture of Sulphuric Acid. 8. During the process of conversion of SO2 to SO3, one more element of oxygen is added and this additional element of oxygen is not taken from the oxygen plant but from the atmosphere. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for consideration are as to the entitlement of the respondents/assessees to Modvat/Cenvat credit for the use of inputs in the manufacture of final products which are exempt or subject to nil rate of duty and the requirement of the assessee to maintain separate accounts with respect to inputs used in dutiable goods as well as exempted goods and the liability arising on the failure of the assessee to maintain such separate accounts. In Civil Appeal Nos. 8621-8630 of 2010, we are concerned with sulphuric acid. In Civil Appeal No. 8631 of 2010, it is caustic soda flakes and trichloro ethylene. In Civil Appeal No. 2337 of 2011, the product is again sulphuric acid and in the case of Civil Appeal No. 5322 of 2010 and the other connected matter of M/s. Rallis India Ltd., it is Phosphoryl A and Phosphoryl B. The issue is as to whether the assessees (respondents) are entitled to Modvat/Cenvat credit on inputs used in the manufacture of the aforementioned exempted (or subject to NIL rate of duty) final products. .... .... .... 16. Before we advert to the interpretations of the aforesaid provisions and to discuss the argument of the Union of India as to whether literal interpretation is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been used in the production of zinc and no part can be traced in the sulphuric acid. It is for this reason, the respondents maintained the inventory of zinc concentrate for the production of zinc and we agree with the submission of the respondents that there was no necessity and indeed it is impossible, to maintain separate records for zinc concentrate used in the production of sulphuric acid. We, therefore, agree with the High Court that the requirements of 57CC were fully met in the way in which the Respondent was maintaining records and inventory and the mischief of recovery of 8% under Rule 57CC on exempted sulphuric acid is not attracted. .... ..... ..... 25. These arguments may seem to be attractive. However, having regard to the processes involved, which is already explained above and the reasons afforded by us, we express our inability to be persuaded by these submissions. We have already noticed above that in the case of Birla Copper (C.A. No. 2337 of 2011) the Tribunal has decided the matter following the judgment in the case of Swadeshi Limited (supra). In that case, Ethylene Glycol was reacted with DMT to produce polyester and ethanol. Methanol was not excisable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is further converted into Sulphur Trioxide which is absorbed in Sulphuric Acid to form Oleum. This Oleum is dissolved in water to get purest form of Sulphuric Acid. It is pertinent to state that under the Environment (Protection) Rules, 1986 vide sub-rule (2) of Schedule I and as per Sl. No. 21 of the Schedule I of the Environment Rules, it is mandatory for the appellant to prevent emission of oxides of sulphur in Smelter and Convertor of copper and it stipulates that waste gases are to be utilized in the manufacture of Sulphuric Acid so as to prevent emission of Sulphur Dioxide. The Apex Court decision cited supra dealt with the identical issue of conversion of Sulphur Dioxide and Sulphur Trioxide into sulphuric acid and held it is only a by-product and not final product. 9. Further, we find this Tribunal Bench in an identical issue of captive consumption Notification No. 67/95 in the case of Ultratech Cement and Others v. CCE - 2015-TIOL-2110-CESTAT-MAD had allowed the benefit of Notification No. 67/95-C.E. 10. Further, we find that as per Notification No. 67/95, both input oxygen and the final products are rightly covered in the Table of the Notification. Proviso (vi) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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