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TMI Blog2024 (9) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Supreme Court is also referred to and it was held that ' The only condition is that sub-rule (2) of Rule 6 of CCR is required to be complied with. In the present case, as per sub-rule (2), appellant manufactured oxygen used in the manufacture of excisable product and they had no obligation to maintain separate accounts for oxygen used in the manufacture of Sulphuric Acid. It is established that appellant did not use oxygen produced in the manufacture of Sulphuric Acid. Accordingly, conditions of Notification No. 67/95 are complied. ' The Tribunal, in the case of Sterlite Industries India Ltd has considered that the waste gas which emerges out of process of purification of copper concentrate in Sulphur Dioxide which is further converted into Sulphur Trioxide which is absorbed in Sulphuric Acid to form Oleum and this Oleum is dissolved in water to get purest form of Sulphuric Acid. The Tribunal has also referred to the various provisions of the Environment (Protection) Rules, 1986 which provides that it is mandatory for the respondent to prevent emission of oxides of sulphur in Smelter and Convertor of copper and it stipulates that waste gases are to be utilized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in smelting furnace with oxygen. In the process, 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 Sulphuric Acid and Water to get concentrate Sulphuric Acid. The Sulphuric Acid produced is cleared by the assessee as final product at Nil rate of duty under Notification No. 12/2012 dated 17th March 2012 for further manufacture of fertilizer. [2.2]. According to the appellant Revenue, since the final product namely Sulphuric Acid is exempted from the Central Excise Duty, the respondent assessee should have discharged the duty on their intermediate product namely oxygen gas which is captively consumed . It was the case of the Revenue that the Exemption Notification No. 67/95-CE dated 16th March 1995 is not available to the oxygen gas since the same is used in the manufacture of exempted Sulphuric Acid. [2.3] A 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Ltd (supra). The Tribunal has, extracted the relevant observations from the decision in the case of Sterlite Industries India Ltd (supra), wherein the decision of the Hon ble Supreme Court is also referred to, as under: 6. After careful consideration of the submissions of both sides and on perusal of records, we find the short issue involved in the appeal relates to denial of benefit of captive consumption Notification No. 67/95-C.E., dated 16-3-1995 on the oxygen gas produced and captively consumed in the manufacture of Copper Anode. The adjudicating authority in his de novo order denied the exemption only on the ground that Sulphuric Acid (H2SO4) is a final product cleared at 'Nil' rate and held that since oxygen is captively used in the manufacture of Copper Anode (dutiable) and Sulphuric Acid (exempted) they are not eligible for Notification No. 67/95. We find that H2SO4 was cleared at Nil rate the fertilizer plant claiming exemption under Sl. No. 28 of Notification No. 6/97, dated 1-3-1997. 7. On careful study of manufacturing process as explained in the proceedings, we find that the appellants have set up a plant only for manufacture of final product copper anode f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished from the chemical process and from manufacturing process there is no justification for the revenue's view that O2 is used in the manufacture of H2SO4. It is evident that oxygen so produced in their captive plant is used only in the purification of copper concentrate in the manufacture of copper anode. Therefore, appellants are eligible for captive consumption of Oxygen under Notification No. 67/95 as the final product copper anode is excisable which is cleared on payment of duty. 10. Notwithstanding above, we find that Hon'ble Supreme Court in the case of UOI v. Hindustan Zinc Ltd. (supra) clearly held that what is manufactured in the final product is only copper only. In that case, Sulphur Dioxide was converted into sulphuric acid which cannot be considered as a final product but it is only a by-product. In view of the above facts, appellants are eligible for Modvat credit. The relevant paragraph of the Apex Court judgment is reproduced as under:- 2. At the outset, the controversy involved may be reflected by pointing out that the questions for consideration are as to the entitlement of the respondents/assessees to Modvat/Cenvat credit for the use of inputs in the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Rule 57CC on the touchstone of the aforesaid position. No doubt, Rule 57CC requires an assessee to maintain separate records for inputs which are used in the manufacture of two or more final products one of which is dutiable and the other is non-dutiable. In that event, Rule 57CC will apply. For example, a tyre manufacturer manufactures different kinds of tyres, one or more of which were exempt like tyre used in animal carts and cycle tyre, where car tyres and truck tyres attract excise duty. The rubber, the accelerators, the retarders, the fillers, sulphur, vulcanising agents which are used in production of tyres are indeed common to both dutiable and exempt tyres. Such assessees are mandated to maintain separate records to avoid the duty demand of 8% on exempted tyres. But when we find that in the case of the respondents, it is not as though some quantity of zinc ore concentrate has gone into the production of sulphuric acid, applicability of Rule 57CC can be attracted. As pointed out above, the entire quantity of zinc has indeed 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 inventor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can through Rule 57CC, reference to final product being manufactured with the same common inputs becomes understandable. This Rule did not talk about emergence of final product and a by-product and still said that Rule 57CC will apply. The appellant seeks to apply Rule 57CC when Rule 57D does not talk about application of Rule 57CC to final product and by-product when the by-product emerged as a technological necessity. Accepting the argument of the appellant would amount to equating by-product and final product thereby obliterating the difference though recognised by the legislation itself. Significantly this interpretation by the Tribunal in Sterlite (supra) was not appealed against by the department. The Hon'ble Apex Court is clearly applicable to the facts of the case as in the present case the sulphuric acid is cleared as by-product as explained in the preceding paragraphs and the final product is only copper anode and not sulphuric acid. The waste gas which emerges out of process of purification of copper concentrate in Sulphur Dioxide which is further converted into Sulphur Trioxide which is absorbed in Sulphuric Acid to form Oleum. This Oleum is dissolved in water to ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hodes and not a Sulphuric Acid. The Tribunal, in the case of Sterlite Industries India Ltd (supra) has considered that the waste gas which emerges out of process of purification of copper concentrate in Sulphur Dioxide which is further converted into Sulphur Trioxide which is absorbed in Sulphuric Acid to form Oleum and this Oleum is dissolved in water to get purest form of Sulphuric Acid. The Tribunal has also referred to the various provisions of the Environment (Protection) Rules, 1986 which provides that it is mandatory for the respondent 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 Hon ble Apex Court has dealt with the similar issue in the case of Hindustan Zinc Ltd (supra). Therefore, in the facts of the case and Sulphuric Acid is not a final product, but is a byproduct and the Tribunal relying upon the aforesaid decisions has held that the respondent is entitled to the benefit of Notification No. 67/1995. [7] For the foregoing reasons, we are of the view that the findings of fact recorded by the Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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