HINDUSTAN COPPER LTD. Vs. C.C.E.

JUDGEMENT

(1.) TRUE to name, the appellant is a leading manufacturer of copper. The said manufacture is from copper concentrate (input). Basically, the process of manufacture is smelting the concentrate in a smelter. During that process of smelting, sulphur dioxide gets released. That di -oxide is further converted by the appellant into sulphuric acid (by -product). Part of sulphuric acid so produced is removed on payment of central excise duty and the remaining is supplied to industrial manufacturers (without payment of duty) under Chapter X procedure. While this is the disposal of the sulphuric acid (by -product), copper produced is smelted into copper cathode (final product) and is cleared on payment of duty. The appellant had taken modvat credit on copper concentrate and was using that credit for the purpose of discharging central excise duty on copper cathode as well as sulphuric acid.

(2.) UNDER the impugned order, it has been held that Rule 57CC is attracted in regard to supply of sulphuric acid under Chapter X procedure since the supplies are duty free and the appellant is liable to pay 8% of the price of sulphuric acid so supplied in terms of Rule 57CG(1), This finding has been reached by the adjudicating authority on the basis that the appellant manufactures dutiable and exempted final products - copper cathode being dutiable and sulphuric acid being exempt - and Rule 57CC requires such a manufacturer to pay 8% of the price of the exempt final product.

(3.) THE contention of the appellant is that the entire copper concentrate (input) is used in the manufacture of only one dutiable final product, copper cathode, and Rule 57CC is not attracted. According to the appellant, the incidental release of sulphur dioxide during the process of manufacture of copper cathode does not change the fact that the input received is totally used in the manufacture of one of final product, copper cathode. It is being contented that the emergence of a by -product is not a case where part of the input gets used in the manufacture of another final (exempt) product. Learned Counsel for the appellant has relied on the judgment of the Apex Court in the case of Swadeshi Polytex Ltd. v. C.C.E. 1988 (38) ELT 794 (SC) in their support.