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2018 (2) TMI 819 - HC - Central ExciseModvat Credit - Manufacture of Steam - Whether STEAM should not be treated as final product when it is not only manufactured through a conscious activity undertaken by the respondents but also requires several well defined steps to manufacture it? - Held that: - there is no dispute as to the process adopted by the assessee to manufacture Carbon Black from CBFS or even as to the generation of 'steam' - admittedly only "lean gases" or "off gases" were released in the manufacture of Carbon Black from CBFS by way of technological necessity. These gases contained Carbon Monoxide. Upon burning Carbon Monoxide content in 'off gases' / 'lean gases' to render that 'waste' or 'refuse' or 'by-product' fit for release in the atmosphere, heat was obtained. Further, it was heat and not "off gases" or "lean gases" thus produced that was used to produce 'steam' - 'steam' is a final product. Whether the benefit of Rule 57-D (1) of the erstwhile Central Excise Rules, 1944 should be extended to STEAM by treating it as a by-product or whether the restriction envisaged under Rule 57-C should be applied for availing credit on inputs used in or in relation to the manufacture of STEAM by treating it as a final product as STEAM is exempted from duty? - Whether for denial of credit under Rule 57-C of the erstwhile Central Excise Rules, 1944 the inputs must be directly linked to the final product? - Held that: - upon a co-joint reading of Rule 57C and Rule 57CC and Rule 57D it thus emerges that full input credit is to be availed by the assessee in cases covered under Rule 57D that is where the 'waste', 'refuse', 'by-product' or 'intermediate product' emerges but at the same time is chargeable to nil rate of duty or is exempt from payment of duty - 'off gases'/'lean gases' having been obtained by way of a technological necessity and their use to generate heat that was employed by the assessee to generate 'steam' from water rendered Rule 57C and 57CC wholly inapplicable to the facts of the present case despite the fact that steam was a final product - decided in favor of assessee. Reference allowed.
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