GANGA RASAYANIE Vs. COMMISSIONER OF CENTRAL EXCISE, BOLPUR

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of various excisable goods like Solvent, Petroleum residues etc. in respect of which they used the various inputs i.e. Cresote oil, Phenol fraction, Aromex etc. The appellants are availing the benefit of Modvat credit of duty paid on the said inputs utilised in the manufacture of the said final product. Apart from that, the appellants are also engaged in the refining of coal tar by the process of distillation and blending. As per the appellants, the said process of refining of coal tar does not change the basic character and composition of the product and even after refining, the product remains to be coal tar classifiable under Heading 2706.00 and no manufacturing activity is involved. They also referred to the Order -in -Original No. 184/CAL -II/94, dated 29 -4 -94 holding the coal tar to be a non -excisable item.

(2.) THE appellants submit that no Modvatable inputs are used in the process of refining of coal tar. However, sometimes, their customers insist on good quality of coal tar and in such cases, they used some of the modvatable inputs after availing the credit of duty. Whenever the coal tar manufactured out of such Modvatable input is cleared by them at nil rate, they are paying the excise duty @8% on the value of the coal tar in terms of the provisions of Rule 57CC. They are also maintaining separate records for receipt and consumption of such Modvatable inputs.

(3.) THE appellants were issued two show cause notices raising demands of duties totally Rs. 50,638.00 for the period - October, 1997 to March, 1998 on the ground that the appellants are engaged in the manufacture of excisable products and non -excisable item i.e. coal tar, which has been cleared without payment of duty by them. The notice urged that inasmuch as they are using the Modvatable inputs in respect of both their final products, they are liable to pay back an amount of 8% of the value of coal tar in terms of the provisions of Rule 57CC. Accordingly, the notice proposed to confirm the demand of duty and imposed penalty upon them. The said show cause notice was confirmed by the authorities below. The duty demanded in the notice was confirmed and penalty of Rs. 75,000.00 (Rupees seventy -five thousand) was also imposed.