Judgment:
1. The respondent to this appeal was engaged in the manufacture of detergent powder and acid slurry. It cleared on payment of duty of 5% spent sulphuric acid, a by-product. By a notice issued to, the department contended that spent sulphuric acid was nothing other than the sulphuric acid which the manufacturer received and utilised, and thus not manufactured by it. It therefore proposed, although not entirely clearly, recovery of the modvat credit taken on so much of acid that was initially utilised in the manufacture from which the spen acid resulted. The Asst. Commissioner confirmed the demand for duty.
2. The manufacturer appealed this order. The Commmissioner (Appeals) held that spent sulphuric acid ought to have been classifiable under heading 38.23 and not under heading 28.07 ofthe tariff. He therefore set aside the demand and directed the Assistant Commissioner t odetermine duty liability and the department questions this finding contending that the correct classification ought to be under heading 28.07.
3. We have heard the departmental representative on this appeal. The respondent is absent and unrepresented.
4. From the facts that we have narrated above it will be evident that the Commissioner (Appeals) decided the appeal on a matter which was entirely irrelevant. Classification of the product was neveran issue before him not having been raised in the show cause notice. However, the larger bench of the Tribunal in CCE Vs. Keti Chemicals 1999 (113) ELT 689 held that the spent sulphuric acid arising in the manufacture of acid slurry is a manufactured product, classifiable under heading 28.07. It also held that consequently the manufacturer of such acid is entitled to credit on the duty paid on the sulphuric acid that is the starting point.Applying the ratio of this decision, we confirm the classification claimed by the department under heading 28.07, byt hold that action initiated by the department to recover duty equal to the modvat credit is impermissible.