Full Judgment
Per S.K. Gaule:
Heard both sides.
2. Revenue is in appeal against the Commissioner (Appeals) order in appeal No. 14(RKS)ST/JPR-I/2008 dated 24.1.2008.
3. The respondents are engaged in the manufacture of detergent powder and cakes falling under Chapter 34 of CETA, 1985. They are availing cenvat credit on inputs, capital goods and input services under Cenvat Credit Rules, 2004. During the manufacture of final product, Spent Sulphuric Acid also gets generated as one of the product. The respondent cleared Spent Sulphuric Acid valued at Rs.583610/- to M/s Jubilant Organosys Ltd.,Gajraula for manufacture of fertiliser against the certificate dated 6.6.2006 issued by the Assistant Commissioner, Central Excise Divison, Hapur under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 read with Rule Notification No.4/2006-CE dated 1.3.2006. The Department asked the respondent to pay an amount equal to 10% of the price of Spent Sulphuric Acid removed without payment of duty along with interest and proposal for penalty of Rs.10,000/-under Rule 15 of Cenvat Credit Rules, 2004 read with Rule 25 of the Central Excise Rules, 2002 was made since they have not followed the procedure provided under Rule 6(2)(b) of Cenvat Credit Rules, 2004. The lower adjudicating authority upheld the proposal in the show cause notice. The respondent filed appeal before the learned Commissioner (Appeals) against the said order. Commissioner (Appeals) while following the decision of the Tribunal in the case of C.C.E., Ludhiana vs. Aarti Steels Ltd. - 2004 ((166) ELT 45 and in Andra Pradesh Mills Ltd. vs. C.C.E., Viaakhapatnam - 2005 (185) ELT 371 set aside the impugned order and allowed the respondent’s appeal. Hence the Revenue’s appeal.
4. The contention of the applicant is that the exempted goods are those which are chargeable to nil rate of duty. They have also made attempt to distinguish the decision of Aarti Steels Ltd. and Anra Pradesh Mills (supra).The contention is that the goods in question are also not covered under the exclusion clause of Rule 6(6) of Cenvat Credit Rules ibid. The contention of the applicant is that they have filed appeal against the Tribunal decision in the case of M/s Kanpur Detergent Cake known as Rohit Surfactants Pvt. Ltd.
5. The respondent filed cross-objection. The contention of the respondent is that Spent Sulphuric Acid is a by-product incidentally emerging at intermediate stage for which no separate account is maintainable and the credit is not deniable. The contention is that the clearance under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 cannot be said to be without duty. The respondent also placed reliance on the Hon’ble High Court of Rajasthan in the case of Hindustan Zinc Ltd. vs. UOI - 2008 (223) ELT 149, Hon’ble High Court of Allahabad decision in the case of Somaiya Organic (India) vs. C.C.E., Allahabad - 2007 (214) ELT 176 , Hon’ble Allahabad High Court decision in the case of Varuna Sulphonators Pvt. Ltd. vs. UOI - 1993 (68) ELT 42, the Hon’ble Supreme Court decision in the case of Swadeshi Polytex Ltd. - 1989 (44) ELT 794, the Hon’ble Supreme Court decision in the case of Hindustan Petroleum Corporation Ltd. vs. C.C.E. -1995 (77) ELT 256 , in the case of Escort Ltd. vs. C.C.E. - 1999 (107) ELT 245 and also in the case of Madras Refinery Ltd. v. C.C.E.- 2007 (212) ELT 231. The contention of the respondent is that clearance made on the basis of certificate issue under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rule, 2001, the modvat credit cannot be denied and the case was decided in their favour.
6. I find that the department case is for recovery of the amount equal to 10% of the price of the Spent Sulphuric Acid removed without payment of duty, under Rule 6(3)(b) of Cenvat Credit Rules, 2004 on the ground that the respondent has not followed the procedure laid down under Rule 6(2) ibid. Rule 6(2) ibid provides that where a manufacturer avails of cenvat credit in respect of any input or input service and manufactures such final products which are chargeable to duty as well as exempted goods, then the manufacturer shall maintain a separate accounts for receipt, consumption and inventory of input and input service meant for use in the manufacture of dutiable final products and the quantity of inputs meant for use in the manufacture of exempted goods. Sub-rule (3)(b) of Rule 6 ibid provides that the manufacturer opting not to maintain the separate accounts as described under sub-rule (2) of Rule 6 of the said rules, shall pay an amount equal to 10% of the total price of the exempted final product. It is undisputed fact that the clearance is made by following Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. Therefore, the clearance could not be said to have been without payment of duty under law. Ld. Commissioner (Appeals) has set aside the impugned order in original while relying upon the decision in the case of C.C.E., Ludhiana vs. Aarti Steels Ltd. and Andra Pradesh Mills Ltd. (supra). Further, the Tribunal in the respondent’s own case had decided the issue in their favour. The Department could not produce any evidence that the aforesaid order of the Tribunal has been stayed or reversed. Ld. Commissioner (Appeals) has given cogent findings and the Department could not produce anything contrary. I do not find any reason to interfere with the impugned order. The appeal is dismissed. Cross-Objections are accordingly disposed of.