1999 (3) TMI 143 - AT - Central Excise

Summary

Issues Involved:
Whether the exemption under Notification No. 19/88 is available to the product spent Nickel Catalyst.

Analysis:

Issue 1: Exemption under Notification No. 19/88 for spent Nickel Catalyst

The appeal was filed to determine if the exemption under Notification No. 19/88 applied to the product spent Nickel Catalyst. The Appellant, a manufacturing company, used Nickel Catalyst as an input in the production of Vanaspati and availed Modvat credit on duty paid for inputs. The Collector demanded Central Excise Duty and imposed a penalty, claiming that the spent Nickel Catalyst was classifiable under a specific heading and should not have been included in the Modvat credit. The Appellant argued that the spent Nickel Catalyst was waste material, wholly exempt from duty under Notification No. 19/88 until a certain date. They contended that as per relevant rules, the credit of duty should not be denied based on waste products. The Appellant maintained that they had complied with statutory requirements and that the excise authorities were aware of the situation, allowing clearance without objection. The Department, however, insisted that duty should have been paid on the clearance of the spent Nickel Catalyst due to the Modvat credit availed by the Appellant.

Issue 1 Analysis:

Upon review, it was noted that the Appellants did not clear Nickel Catalyst itself but the residue left after its use in manufacturing finished products. Rule 57D(1) stipulates that Modvat credit cannot be denied for inputs present in waste or by-products. As the waste, i.e., spent Nickel Catalyst, fell under a duty-exempt category per Notification No. 19/88, no excise duty was payable by the Appellants. Additionally, Rule 57F(4) allows for the removal of waste on payment of duty as if it were manufactured in the factory, with the duty rate applicable at the time of removal. Since the spent nickel catalyst was exempt from duty, the demand for Central Excise Duty and penalty were set aside, and the appeal was allowed.