9911796707
TMI Blog2003 (8) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... rnace. By the aforesaid process, the products which emerges are - Sl. No. Description of Products Tariff Heading Tariff Rate (i) Hot liquid iron/Pig iron 7201 16% (ii) Granulated Slag 2618 16% (iii) Non-Granulated Slag 2619 16% There also emerges a by-product known as Corex gas, which attracts 'nil' tariff rate of duty, under Heading 2705.00 (b) The hot liquid iron is consumed captively for manufacture of steel slabs which in turn are used in the strip mill for production of HR Coils/Sheets. The granulated and the non-granulated slag are sold to independent customers. Some quantity of the Corex gas is consumed captively in the basic oxygen furnace and hot strip mill, and certain quantity is also flared up in the flaring system. Some Corex gas is also sold through pipeline to two adjacent factories namely M/s. Jindal Tractebel Private Co. Ltd. (hereinafter referred to as JTPCL) and M/s. Jindal Praxair Oxygen Co. Ltd. (hereinafter referred to as JPOCL). These two factories use the corex gas as a fuel. (c) On 16th January, 2001, the Commissioner of Central E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, the relevant rule is Rule 57D which provides that : "credit of specified duty shall not be denied or varied on the ground that part of the inputs is contained in any waste, refuse or by-products arising during the manufacture of the final product, whether or not such waste or refuse or by-product is exempt from the whole of the duty of excise leviable thereon or chargeable to nil rate of duty..........". (iii) The provisions of Rule 57D, which is directly applicable to corex gas as a by-product. It was submitted that Rule 57CC is to be construed harmoniously with the other rules including Rule 57D. (iv) The demand was also challenged on the grounds of limitation as the emergence of a by-product namely corex gas was known to the Department as this was declared in the Rule 173B declaration. The statements of Shri Vijayakumar and Shri J.P. Agarwal also bring out that the appellant bonafidely believed that corex gas does not attract Rule 57CC as it was not one of the final products. Attention was also invited to paragraph 5 of the CBEC Circular M.F. (D.R.) F. No. B.4/7/2000-TRU, dated 3-4-2000 which reads as follows : "5. Some doubts have been raised whether Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Corex gas is not the final product and no inputs are acquired and used by them for the manufacture of Corex gas is not tenable and cannot be accepted. Since waste, scrap and by-products are dutiable even if they are not manufactured, as these are produced, similarly Corex gas which is a by-product as admitted by JVSL would attract the provisions of Central Excise Rules. Therefore, I am of firm view that Corex gas a by-product, which emerges during the manufacture of HR Coils/Sheet is a final product so far as Central Excise Rules are concerned". (d) Thereafter, on examination of the provisions of Rule 57CC/57AD and the fact that the appellants were availing Modvat credit of the specified inputs, and that Corex gas is admittedly charged to nil rate of duty would not mean that it was not required to be accounted for and cleared on invoices as prescribed under the Rule 57A. (e) He, thereafter, determined that during the period 1-10-99 to 31-7-2000, the appellants had cleared Corex gas valid of Rs. 22,47,32,072/-, without payment of Rs. 1,79,78,566/- being 8% of the Corex gas cleared to JPOCL and JTPCL... and that the same was required to be paid in terms of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act, 1944. It is well settled that the amount required to be deposited in terms of Rule 57CC(1)/57AH(1), has nothing to do with duty. It has no relation to value under Section 4 of goods or the credit taken under the Modvat scheme. It is in fact not duty at all, as held by the Board in its Circular B-42/1/96, dated 27-9-1996, reproduced in 1996 (17) RLT M 17. Therefore, there cannot be a demand issued and/or confirmed under the provisions of Section 11A of the Central Excise Act, 1944 read with Rule 57AH and/or Rule 57-I of the Modvat Rules. Following the decision of Pushpaman Forgings [2002 (149) E.L.T. 490 (T) = 2002 (48) RLT 107], it has to be held that if such amounts are not debited in absence of the machinery provisions in the Act or the Rules for recovery thereof, the said amounts, if not debited cannot be recovered as made out in the present proceedings impugned before us. (b) The submissions were made by the learned Advocate on behalf of the appellants as regards the nature of the product Corex Gas. Without going into these details, as submitted by the learned advocate and determine whether Corex gas was a 'by-product' or a 'final product', we woul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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