Custom, Excise & Service Tax Tribunal
M/S Philips Carbon Black Ltd vs Commissioner Of Central Excise-Rajkot on 9 April, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad *****
Appeal No. : E/12073/2014 [ Arising out of OIO-RAJ-EXCUS-000-COM-188-13-14 dtd 20/2/2014 Passed by Commissioner of Central Excise-RAJKOT ] M/s Philips Carbon Black Ltd - Appellant(s) Vs Commissioner of Central Excise-RAJKOT - Respondent (s) Represented by For Assessee : Shri J C Patel, Advocate For Revenue : Shri J Nagori, Authorised Representative For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical) Date of Hearing / Decision : 9/4/2015 ORDER No. A/10759 / 2015 dtd 9/4/2015 Per : Mr.P.K. Das, The relevant facts of the case, in brief, are that the appellants are engaged in the manufacture of Carbon Black, classifiable under Chapter Heading 2803 00 10 of the Schedule to the Central Excise Tariff Act 1985. The main input is Carbon Black Feed Stock (CBFS). During the process of manufacture of Carbon Black, Lean Gas is emerged as by-product, which is used for generation of electricity. The electricity was partly used in the plant and partly sold.
2. According to the Revenue, electricity is exempted and therefore they are liable to pay the amount 8% / 10% on value of the electricity under Rule 6 of the Cenvat Credit Rules. The Learned Advocate for the appellant, relied upon the following decisions:
1. Hitech Carbon Vs CCE, Allahabad 2003(161)ELY 407 (Tri.Del)
2. Rallis India Ltd Vs UOI 2009(233)ELT 301 (Bom)
3. CCE, Vadodara 1 Vs Sterling Gelatin 0-2011(270) ELT.200(Guj)
4. UOI & Others Vs Hindustan Zinc Ltd Civil Appeal No 8621 of 2010 (SC)
5. Ballarpur Industries Ltd Vs CCE Nagpur =-2006(205)ELT 483(Tri.Mum)
3. The learned Authorised Representative for the Revenue attempted to distinguish the decisions of the Tribunal in the case of Hi-tech Carbon (supra) on the ground that the Lean Gas is ultimately used in exempted goods. We find that the Tribunal in the case of Hi-tech Carbon (supra) has discussed in detail this issue. For the purpose of proper appreciation of the case, the relevant portion of the decision of the Tribunal in the case of Hi-tech Carbon (supra) is reproduced below:
We have considered the submissions of both the sides. It has not been disputed by the Revenue that off-gases are generated as a result of cracking of CBFS and these gases are burnt. The Final product of the appellant is Carbon Black for manufacture of which inputs namely Carbon Black Feed Stock is brought into the factory and the Modvat credit is availed of. The generation of off Gases is nothing but a by-product in the process of manufacture of carbon black. The definition of the by-product as referred to by the learned Senior Departmental Representative supports the view that the off-gases are nothing but by-product as the same has been generated incidentally in the production of something else that is carbon black. Rule 57D(1) of the Central Excise Rules at the relevant time provided that credit of specified duty shall not be denied or varied on the ground that part of inputs is contained in any waste, refuse, or by-product arising during the manufacture of final product, or that the inputs have become waste in or in relation to the manufacture of the final product, whether or not such waste, refuse or by-product is exempted from whole of the duty of excise leviable thereon or chargeable to nil rate of duty or is not specified as a final product under Rule 57A. It is thus apparent from the provisions of Rule 57D(1) that the credit shall not be denied on the ground that part of the inputs is contained in a by-product. It is also not in dispute that by-product in the present matter namely, off gases are burnt out which generate heat which in turn is used in the boiler to generate steam. No doubt the steam has been generated by the appellants as a conscious act but it cannot be claimed by the Revenue that any part of the inputs, that is CBFS or any other inputs which has gone into the manufacture of Carbon Black has been used in the manufacture of steam. For the purpose of applying the provisions of Rule 57C or Rule 57CC, it is the pre-requisite that the inputs are used in the manufacture of products which are exempted from the whole of the duty of excise or is chargeable to nil rate of duty. The mere fact of using the off gases in the generation of steam will not tentamount to using the Modvatable inputs in the manufacture of exempted product that is steam. The Appellate Tribunal in the case of Aarti Drugs Ltd. v. Commissioner of Central Excise Mumbai-III - 2001 (136) E.L.T. 1099 (Tribunal) = 2001 (45) R.L.T. 213 has held that provisions of Rule 57CC would not apply in the case of by-product. It has also been observed by the Tribunal that by insertion of Rule 57CC, there was no intention to eliminate the benefit available under Rule 57D(1) to a by-product. The marketability or otherwise of by-product is not really an issue.. The Tribunal again in the case of Gas Authority of India Ltd. (supra) observed that when a manufacturer sets out to create a product out of certain raw materials, he not only creates the product but also creates other goods which are refuse, waste or by-product. The classification of goods into final products, by-products, waste and refuse is mainly on commercial consideration and the Plan of manufacture. The Tribunal in Gas Authority of India Ltd. case, after referring to definition of by-product as given in Chambers Dictionary and Websters Compressed Dictionary has held that the lean gas obtained by processing natural gas to remove propane and butane is nothing but a by-product and the provisions of Rule 57CC were not applicable to lean gas and the benefit of Rule 57D was extended.
Following the ratio of these decisions, we are also of the view that provisions of Rule 57CC would not be applicable to the steam in the present matter. Thus we set aside the impugned Order and allow the Appeal. It is noticed that Honble High Court of Bombay and Honble High Court of Gujarat had also approved the views of the Tribunal.
4. In view of the above discussions, we set aside the impugned order, The appeal filed by the applicant is allowed with consequential relief.
(Dictated and pronounced in the Court)
(H.K. Thakur) (P.K. Das)
Member (Technical) Member (Judicial)
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