Custom, Excise & Service Tax Tribunal
A.R. Sulphonates Pvt. Ltd vs Commissioner Of Central Excise, ... on 5 February, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/781 & 954/2011 & Appeal No.E/481/2012 (Arising out of Order-in-Appeal No.SB/63/Th-I/2011 dated 7.2.2011, OIA No. SB(125)125/Th-I/2011 dated 22.3.2011 & OIA No. YDB(15)Th-I/2012 dt. 24.02.2012 passed by the Commissioner of Central Excise (Appeals) Mumbai-I) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== A.R. Sulphonates Pvt. Ltd.
:
Appellant VS Commissioner of Central Excise, Thane-I :
Respondent And :
Appellant Commissioner of Central Excise, Thane-I VS A.R. Sulphonates Pvt. Ltd. :
Respondent Appearance Shri Sunil Agarwal, Advocate with Ms. Pushpa Pai Advocate for Appellant/Respondent Shri N.N. Prabhu Desai, Supdt. (A.R) for Appellant/Respondent CORAM:
Honble Shri Ramesh Nair, Member (Judicial) Date of hearing : 05/02/2016 Date of decision: 05/02/2016 ORDER NO.
These appeals are directed against the Order-in-Appeal passed by the Commissioner (Appeals) as per the details given below: Sr.No. Appeal No. Name of the Appellant OIA No. & Date Period Amount of Duty & Penalty (Rs.)
1.
E/781/2011 A.R. Sulphonates Pvt. Ltd.
SB/63/Th-I/2011 dated 7.2.2011 1.6.2008 to 31.5.2009 6,93,612/-
2. E/481/2012 CCE, Thane-I YDB(15)Th-I/2012 dated 24.02.2012 April 2010 to January, 2011 2,04,288/-
3. E/954/2012 A.R. Sulphonates Pvt. Ltd.
SB(125)125/Th-I/2011 dated 22.3.2011 1.6.2009 to 31.3.2010 1,13,270/-
2. The fact of the case is that the assessee are engaged in the manufacture of Linear Alkyl Benzene Sulphonic Acid (LABSA). For the manufacture of LABSA two inputs are used i.e. Linear Alkyl Benzene (LAB)and Sulphuric Acid. During the process of manufacture of final product i.e. LABSA the product namely Spent Sulphuric Acid also arises. The assessee cleared the Spent Sulphuric Acid on payment of duty and part of the clearances of Spent Acid are made under exemption notification to the fertilizer unit. The Revenues contention is that the Spent Acid is also a product and on the clearance of the same under exemption would attract payment of 10% of the value of the said goods in terms of Rule 6(3) (b) of Cenvat Credit Rules 2004. Accordingly, in the adjudication order the demand was confirmed. Revenue as well as assessee challenged the adjudication orders before the Commissioner (Appeals). In one of the case related to Appeal No.E/481/2012, the Commissioner (Appeals) allowed the appeal of the assessee where as the matter relates to Appeal No. E/954/2011 the Commissioner (Appeals) rejected the appeal of the assessee. Aggrieved by the impugned order, the assessee as well as Revneue is before me.
3. Shri Sunil Agarwal Ld. Counsel for the assessee along with Ms. Pushpa Pai Advocate submits that the Spent Acid is a by-product arising unavoidably in the manufacture of LABSA and it is settled position that on the by-product/residue, the Cenvat Credit on the input contained therein cannot be denied. Accordingly, there is no application under Rule 6 (3) (b) of Cenvat Credit Rules and the demand in the present case is not sustainable. In support he placed reliance on the following judgments.
(i) Union of India Vs. Hindustan Zinc Ltd.
2014 (303) E.L.T. 321 (S.C.)
(ii) Rallis India Ltd. Vs. Union of India 2009 (233) E.L.T. 301 (Bom.)
(iii) Commissioner of C. Ex. & Customs, Vadodara-I Vs. Sterling Gelatin 2011 (270) E.L.T. 200 (Guj.) upheld by Supreme Court Commissioner V. Sterling Gelatin 2015 (320) E.L.T. A343 (S.C.)
(iv) Commissioner of C.Ex. Ahmedabad-III Vs. Nirma Ltd. 2012 (281) E.L.T. 654 (Guj.)
(v) Commissioner of Central Excise Vs.Gas Authority of India Ltd. 2008 (232) E.L.T. 7 (S.C.)
(vi) Commissioner of C.Ex., Pondicherry Vs. Advance Detergents Ltd. 2015 (322) E.L.T.508 (Mad.)
(vii) Cadbury India Ltd. Vs. C.C.E, Mumabi-III 2015 (322) E.L.T. 765 (Tri.-Mumbai)
(viii) Sharad SSK Ltd. Vs. Commissioner of Central Excise, Kolhapur 2015 (321) E.L.T. 468 (Tri.-Mumbai)
4. On the other hand, Shri N.N. Prabhudesai, Learned Supdt. (A.R.) appearing on behalf of the Revenue reiterates the grounds of Revenues appeal and findings of the impugned order in the parties appeal. He further submits that the Spent Acid is also a final product which is like LABSA. Therefore, the same treatment to be given to both the products hence it cannot be said that Spent Acid is by-product, therefore Spent Acid cleared under exemption shall attract payment of 10% in terms of Rule 6 (3) (b) of Cenvat Credit Rules, 2004. He placed reliance on the following the judgments:
(i) Collector of C.Ex.,Ahmedabad Vs. Nirma Chemical Works Ltd. 2002 (146) E.L.T. 485 (S.C.)
(ii) Southern Petrochemical Inds. Vs. Commissioner of C.Ex., Madras 2002 (148) E.L.T. 1012 (Tri.-Chennai)
(iii) Collector of C. Ex. Ahmedabad Vs. Keti Chemicals 1999 (113) E.L.T. 689 (Tribunal)
(iv) Rallies India Ltd. Vs. Commissioner of Central Excise, Salem 2007 (208) E.L.T. 25 (Tri.-LB)
(v) Kumbhi Kasari SSK Ltd. Vs. Commissioner of Central Excise, Pune III 2014 (299) E.L.T. 74 (Tri.-Mumbai)
(vi) Commissioner of C.Ex., New Delhi Vs. Hari Chand Shri Gopal 2010 (260) E.L.T. 3 (S.C.)
(vii) Commissioner of Sales Tax, Bombay Vs. Bharat Petroleum Corpn. Ltd.
1995 (77) E.L.T. 790 (S.C.)
5. I have carefully considered the submissions made by both the sides. I find that the Spent Acid is generated unavoidably during the course of manufacture of Linear Alkyl Benzene Sulphonic Acid (LABSA). The main product is LABSA and the Spent Acid generates unintentionally and unavoidably in the process therefore by nature itself the Spent Acid is a by-product. The issue whether credit is admissible on the input contained in by-product or whether Rule 6(3)(b) is applicable in respect of clearance of by-product under exemption has been settled by the various judgments as cited by the Ld. Counsel. Moreover as per Para 3.7 of Chapter 5 of CBEC Manual of Supplementary Instructions it is provided as under:
CENVAT Credit is also admissible in respect of the amount of input contained in any of the waste, refuse or by-product. Similarly, CENVAT is not to be denied if the inputs are used in any intermediate of the final product even if such intermediate is exempt from payment of duty. The basic idea is that CENVAT Credit is admissible so long as the inputs are used in or in relation to the manufacture of final products and whether directly or indirectly. From the above provision which is pari-materia to Rule 57D of erstwhile Central Excise Rules 1944, it is clear that Cenvat Credit is admissible on the input contained in by-product/waste refuse. As discussed above, the Spent Acid is undoubtedly by-product therefore by the virtue of above provision as well as the issue does not remain as resintegra, in the light of the judgments cited by the Ld. Counsel the demand of 10% of the value of the exemption goods in terms of Rule 6(3) (b) is not sustainable. I, therefore allow the Appeal No. E/781/2011 and E/954/2011 filed by the party and Appeal No. E/481/2012 filed by the Revenue is dismissed.
(Pronounced in court) (Ramesh Nair) Member (Judicial) SM.6
Appeal No. E/781 & 954/2011 & Appeal No.E/481/2012