Customs, Excise and Gold Tribunal - Mumbai
Collr. Of C. Ex. And Customs vs Indo-Nippon Chemical Co. Ltd. on 9 January, 1998
Equivalent citations: 1999(113)ELT985(TRI-MUMBAI)
ORDER K.S. Venkataramani, Member (T)
1. The Commissioner of Central Excise and Customs, Vadodara has filed this appeal against the order dated 23-4-1992 passed by the Commissioner of Customs and Central Excise (Appeals) Bombay. The Respondents filed an application under Rule 57F(2) of Central Excise Rules before the Jurisdictional Asstt. Commissioner of Central Excise, Division IV, seeking permission to remove Di-Ethyl-Phthalate as an input for manufacturing of Denatured Ethyl Alcohol at another factory and bringing that Denatured Ethyl Alcohol which will be used as a raw-material for the manufacture of Di-Ethyl-Phthalate. The Asstt. Commissioner found that Di-Ethyl-Phthalate has been utilised for the denaturing of Ethyl Alcohol and this product is the final product for the other factory and it is an input for the respondent. The Asstt. Collector held that such type of manufacturing is not covered by Rule 57F(2) and accordingly he rejected the application from the respondent. The Commissioner (Appeals), however, found that the respondents have cleared Di-Ethyl-Phthalate on payment of duty for manufacture of intermediate products namely Denatured-Ethyl Alcohol necessary for the manufacture of the final product Di-Ethyl-Phthalate. On this reasoning the Commissioner (Appeals) found that the situation can be accommodated under Rule 57F(2).
2. We have heard Shri D. Gurnani, the ld. DR and Shri D.M. Mehta, the ld. Counsel for the respondents. Rule 57F(2) laid down that the manufacturer may with the permission of the Collector remove the inputs as such or after the inputs have been partially processed to a place outside the factory for the purpose of test, repairs, refining or carrying out any other operations necessary for the manufacture of the final products and return the same to the factory for further use in the manufacture of final products. In the present case Di-Ethyl-Phthalate itself is the final product of the product respondent. It is not an input for their final product. The process of manufacture of Di-Ethyl-Phthalate consists of reacting Denatured Ethyl Alcohol with Phthalic Anhydride followed by further process of purification. The basic input are Phthalic Anhydride and Ethyl Alcohol. In the present case the respondents are using Danatured Ethyl Alcohol as input since Alcohol as such cannot be removed or brought due to restrictions imposed by State Government authorities. The same material is denatured by adding 2% Di-Ethyl-Phthalate by the other factory to whom it is sent by the respondent. Therefore the Denatured Alcohol received from the other factory is the input material for the final product Di-Ethyl-Phthalate. It is also seen that the respondent have filed classification list and price-list for clearances of Di-Ethyl-Phthalate as their manufactured product. In such a context we are unable to accept the contention made before us that Di-Ethyl-Phthalate is both their input as well as their final product. Another aspect in this case which shows that Rule 57F(2) will have no application at all to this situation is the fact on record by both the lower authorities that the respondent are clearing Di-Ethyl-Phthalate on payment of duty to the other factory. This by itself will be contra to the provisions envisaged under that rule. The Commissioner (Appeals) has come to the conclusion that the Denatured Alcohol received from the other factory is in the status of an intermediate product. In such a situation the respondent should only seek to take duty credit, if any, on such product received by them from the other factory but it would appear that the product received is exempted from duty. Therefore we are of the view that the Asstt. Commissioner was right in holding that the respondent application for permission to remove Di-Ethyl-Phthalate under Rule 57F(2) is not acceptable. The appeal is allowed.