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Showing contexts for: LABSA in M/S. Advance Detergents Ltd vs Cce, Puducherry on 2 March, 2017Matching Fragments
Appearance Shri M. Kannan, Advocate for the Appellant Shri K.P. Muralidharan, AC (AR) for the Respondent CORAM Honble Shri D.N. Panda, Judicial Member Honble Shri Madhu Mohan Damodhar, Technical Member Date of Hearing / Decision: 02.03.2017 Final Order Nos. 40375-40380 / 2017 Per D.N. Panda Learned counsel for the appellant says that while manufacturing LABSA (Linear Alkyl Benzene Sulphuric Acid) sulphuric acid was used and in the process of manufacture, a byproduct called spent sulphuric acid comes up. Such bye product whenever sold without end-use necessity of the law, duty was realized and that was paid to the treasury. Whenever this spent sulphuric acid is cleared with end-use requirement of Notification No. 6/2002-CE dated 1.3.2002 for use thereof in manufacture of fertilizer, there was no duty realization made since such clearance is exempt as per the notification.
2. Learned counsel says that exemption of the by-product emerged in terms of a notification, does not ipso facto attract Rule 6(3) of CENVAT Credit Rules, 2002/2004 for the reason that this by-product emerged as a technological necessity in the course of manufacture of LABSA. Appellant had not caused prejudice to Revenue. The duty realized on clearance of the spent sulphuric acid to buyers not covered by the end user notification was deposited into treasury. The clearances made to notified end user under specific notification being exempt, the case of the appellant is beyond the purview of Rule 6(3) of CENVAT Credit Rules, 2002 / 2004.
4. Revenue on the other hand says that the adjudicating authority has passed proper order and also learned Commissioner (Appeals) agreed to that.
5. Heard both sides and perused the records.
6. The spent sulphuric acid is a technological outcome in the course of manufacture of LABSA using the input sulphuric acid. Appellant had not intended to manufacture the by-product. Its object was only to manufacture the principal finished goods. When technological process brought out the spent sulphuric acid in the course of manufacture and when that was sold to buyers other than notified end users, duty thereon was paid to the treasury. Only to the extent of spent sulphuric acid sold to the notified end user for use thereof in the manufacture of fertilizer, the appellant was not required to pay the duty thereon. Such situation does not warrant to say that the appellant had manufactured exempted goods. The goods which are exempt by virtue of specific notification, those are not exempt generally from duty. Therefore spent sulphuric acid sold to end user buyers cannot be said to be exempted goods. 7. In the present case, appellants conduct clearly shows that it has distinguished the clearances to two different buyers. The first category of buyers are duty paying buyers and the second category buyers are notified end users. Therefore, there appears no prejudice caused by appellant to Revenue to be debarred from grant of the CENVAT credit to it nor the prescribed percentage of levy is imposable on it.
8. The Honble High Court of Madras following the ratio laid down in the case of Hindustan Zinc Ltd. (supra), held in the appellants own case reported in 2015 (322) ELT 508 (Mad.) that spent sulphuric acid not being final product, the appellant cannot be denied of the CENVAT credit available to it on the input used to manufacture LABSA. Mere emergence of spent sulphuric acid does not debar the appellant to this benefit in view of the peculiar circumstances stated above.
9. In the result, all the five appeals are allowed on the fact and circumstances of the case.