NIRMA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, AHMEDABAD

JUDGEMENT

(1.) AFTER hearing both sides, duly represented by Shri M.A. Patel, learned Advocate appearing for the appellants and Shri R. Srova, learned JDR appearing for the Revenue, we find that the appellants are engaged in Detergent Cakes/Powders and Fertilizers falling under Chapters 34 and 31 of 1st Schedule of Central Excise Tariff Act, 1985.

(2.) DURING the course of manufacture of detergent washing powder, a by -product, viz., spent sulphuric acid emerges which is classifiable under chapter sub -heading 28070010. The said by -product is cleared on payment of duty and also cleared at nil rate of duty under Notification No. 4/2006 -C.E., dated 1 -3 -06 which exempts sulphuric acid, oleum, oxygen and ammonia from payment of duty if used in the manufacture of fertilizers and where such use is elsewhere than in the factory of production, the exemption shall be allowed if procedure set out in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 is followed. The respondents had cleared the goods in question, viz., spent sulphuric acid, at nil rate of duty for use in the manufacture of fertilizers by following the procedure under the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.

(3.) THE department entertained a view that the appellants also manufactured Spent Sulphuric Acid which is cleared as dutiable as well as exempted product and since separate accounts of inputs used in the said final product are not maintained, the appellant is required to reverse 10% of the value of such exempted clearance of Spent Sulphuric Acid as per Rule 6(3)(b) of Cenvat Credit Rules, 2004. Show Cause Notice dt. 12 -3 -09 (covering the period Jan. 06 to Mar. 08 involving amount of Rs. 1,61,410/ -) and Show Cause Notice dt. 26 -3 -09 (covering the period Apr. 08 to Feb. 09 involving amount of Rs. 2,60,506/ -) were issued to the appellant on the ground that the goods manufactured by them are not covered under Rule 6(3)(a) of Cenvat Credit Rules, 2004 and therefore in terms of Rule 6(3)(b) of Cenvat Credit Rules, 2004 and therefore in terms of Rule 6(3)(b) Cenvat Credit Rules ibid, they proposed reversal of 10% of the price of the goods excluding the taxes paid on such goods at the time of their clearance. Penalty under Rule 15(2) of Cenvat Credit Rules, 2004 read with Section 11AC and interest under Section 11AB of Central Excise Act, 1944 was also proposed. The said Show Cause Notices were adjudicated vide the impugned orders and recovery along with interest was confirmed and penalties equal to demand was also imposed on the appellant.