CCE, ALLAHABAD Vs. M/S HI

JUDGEMENT

(1.) This reference has been made under Section 35(H) of the Central Excise Act, 1994. It arises from the order of the Customs, Excise Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as the Tribunal) dated 7.3.2003. The dispute pertains to the period April 1996 to August 1996. The reference itself was made on the following questions of law:-

(2.) The Tribunal by its final order dated 7.3.2003 had allowed the appeal filed by the assessee and held that the 'off gases' / 'lean gases' were a by-product obtained in the manufacture of Carbon Black from Carbon Black Feed Stock (CBFS in short). The Tribunal had relied upon Rule 57D(1) of the Central Excise Rules, 1944 (hereinafter referred to as the Rules) and held that credit shall be denied to the assessee on any part of the input i.e. CBFS by attributing its utilization in manufacture of 'steam' cleared at nil rate of duty.

(3.) The assessee manufactured Carbon Black, that are goods classifiable under Chapter 28 of the First Schedule to the Central Excise Tariff Act, 1985 (hereinafter referred to as the Tariff Act), using CBFS as raw material/input. In that process, RFO/LSHS/LDO/FO was used as fuel. The assessee, subjected CBFS to process known as thermal cracking. It resulted in production of Carbon Black in particle form. However, in this process, 'off gases' also known as 'lean gases' emerged by way of technological necessity. Basically, those gases were crude hydrocarbon gases having high content of Carbon Monoxide. According to the assessee Carbon Monoxide being a hazardous gas, it could be released freely into the atmosphere. Therefore, the assessee burnt the Carbon Monoxide content in the 'off gases' / 'lean gases' before releasing the same into the atmosphere.