2009 (2) TMI 683 - AT - Central Excise

Summary

Issues involved: Determination of duty liability on the by-product Di-Calcium Phosphate arising during the manufacture of Gelatin due to the use of common input Hydrochloric Acid.

Summary:

Issue 1: Duty liability on the by-product Di-Calcium Phosphate

The appellant, engaged in Gelatin manufacture, faced duty confirmation on Di-Calcium Phosphate emergence, an exempted by-product under Chapter 23, due to common input Hydrochloric Acid used in both dutiable Gelatin and exempted Di-Calcium Phosphate. The impugned order confirmed duty at 8% of the exempted final product price, citing a show cause notice from 3-2-2005 for the period 1-4-2003 to 31-3-2004.

Issue 2: Applicability of Rule 57CC and precedent

The Tribunal referred to a Larger Bench decision in Rallies India Ltd. v. Commissioner of Central Excise, Salem, which was set aside by the Mumbai High Court. The High Court ruling clarified that no duty is payable on waste mother liquor arising in Gelatin manufacture, allowing full credit of duty paid on Hydrochloric Acid. The judgment emphasized that Rule 57CC does not apply if waste mother liquor is not a final product, providing relief from duty payment obligations.

Issue 3: Similarity with precedent and relief granted

In the present case, where mother liquor processed into Di-Calcium Phosphate mirrors the precedent's scenario of processing into exempted phosphoryl 'A' and 'B', the Tribunal found no duty liability under Rule 57CC. Following the precedent's rationale, the impugned order was set aside, and the appeal was allowed with consequential relief.

This judgment clarifies the duty liability on by-products arising from common inputs in manufacturing processes and highlights the significance of precedent in determining excise duty obligations.