Cce, Jaipur-I vs M/S.Shiv Agrivo Ltd

IN THE CUSPTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI

Date of Hearing/ Decision:16.09.2015

Excise Appeal No/E/2063/2006-EX(DB)

[Arising out of Order-in-Appeal No.70(MPM)CE/JPR-I/2006 dated 21.03.2006 passed by the Commissioner (Appeals), Central Excise, Jaipur).

CCE, Jaipur-I Appellants

Vs.

M/s.Shiv Agrivo Ltd. Respondent

Appearance:

Rep. by Shri R.K. Grover, Advocate for the appellant.

Rep. by none for the respondent.

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Coram: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No.52887/2015 dated:16.09.2015

Per B. Ravichandran:

The party is in appeal against the order-in-appeal dated 17.02.2006 passed by the Commissioner (Appeals).

2. The brief facts of the case are that the respondents are engaged in the manufacture of Refined Vegetable Oil. During this process, Acid Oil is also generated as a by-product. The said by-product is cleared without payment of duty. Since the respondent are not maintaining separate records for use of cenvatable inputs for dutiable and exempted final products proceedings were initiated against them resulting in the original order. The original authority confirmed the recovery of 8%/10% of the value of exempted goods in terms of Rule 6(3) of the Cenvat Credit Rules, 2002. He imposed equal penalty on the respondent. On appeal, the ld. Commissioner (Appeals) vide impugned order dated 17.02.2006 set aside the original order. Aggrieved by this order, the Revenue is before us.

3. In the appeal, it is pleaded that the ld. Commissioner (Appeals) erred in applying Boards Circular dated 3.4.2000 and the Tribunals decision in the case of Aarti Drugs Ltd. reported in 2001 (133) ELT 385 (Tribunal-Mumbai). These are relating to erstwhile Central Excise Rules, 1944 and not relevant to Cenvat Credit Rules, 2002. The term by-product has not been defined in Central Excise Law. The Acid Oil produced by the respondent is classifiable under Central Excise Tariff and has been exempted vide Notification no.115/75-CE. As such, it is pleaded that the provisions of Rule 6 will apply and in absence of separate accounts, the respondent is liable to pay 8% or 10% of the value of the exempted goods cleared by them. It was pleaded that similar matters are pending with the Honble Apex Court and as the matter is subjudice, the ld. Commissioner (Appeals) was not required to decide the appeal till the final disposal of the pending cases.

4. Ld. Authorised Representative reiterated the grounds of appeal.

5. None appeared on behalf of the respondent.

6. We have examined the appeal records.

7. The ld. Commissioner (Appeals) decided the issue after examining the legal provisions of Rule 6 of the Cenvat Credit Rules, 2002, CBECs Manual of Supplementary Instructions and the Tribunals Orders on similar issues. He more specifically relied on this Tribunals order in the case of Aarti Drugs Ltd. (supra). It is not disputed that while manufacturing Refined Vegetable Oil through solvent extraction method, Acid Oil emerges as by-product. It is also not disputed that various duty paid inputs on which cenvat credit has been availed were infact used in the manufacture of Refined Vegetable Oil and no duty paid input is specifically attributable as used in the manufacture of Acid Oil. We find that the Commissioners (Appeals) reasoning to set aside the original order as both factually and legally tenable. The Honble Supreme Court in Union of India Vs. Hindustan Zinc Ltd. (2014-TIOL-55-SC-CX) held that when a by-product emerges as a technological necessity, there is no reason to treat them as final product for cenvat credit purposes. The Honble Apex Court was dealing with the case of applicability of Modvat provisions for SO2 (later converted to H2SO4) emerging in the course of production of zinc. It was held that recovery of 8% of value of exempted sulphuric acid is not required. There is no ground in the Revenues appeal to find infirmity with the order of the ld. Commissioner (Appeals). Accordingly, the appeal is dismissed.

( Ashok Jindal )

Member (Judicial)

( B. Ravichandran)

Member (Technical)

Ckp.

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