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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.

(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:

(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: