TMI Blog2006 (4) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant into sulphuric acid (by-product). Part of sulphuric acid so produced is removed on payment of central excise duty and the remaining is supplied to industrial manufacturers (without payment of duty) under Chapter X procedure. While this is the disposal of the sulphuric acid (by-product), copper produced is smelted into copper cathode (final product) and is cleared on payment of duty. The appellant had taken modvat credit on copper concentrate and was using that credit for the purpose of discharging central excise duty on copper cathode as well as sulphuric acid. 2. Under the impugned order, it has been held that Rule 57CC is attracted in regard to supply of sulphuric acid under Chapter X procedure since the supplies are duty free a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 57D of Central Excise Rules. 5. We may first note the legal position. Rule 57C states that no No credit of the specified duty shall be allowed on such quantity of inputs which is used in the manufacture of final products which are exempt from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty. In the present case, revenue authorities are treating clearance of sulphuric acid under Chapter X procedure as clearance of exempt final product. Demand has been made in terms of Rule 57CC(1) pursuant to this finding that final product is exempt. That Rule states that Where a manufacturer is engaged in the manufacture of any final product which is chargeable to duty as well as in any other final product whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit of exemption is to be considered, this should be strictly considered. But the strictness of the construction of exemption notification does not mean that the full effect to the exemption notificaion should not be given by any circuitous process of interpretation. After all, exemption notifications are meant to be implemented and trade notices in these matters clarify the stand of the Government for the trade. It is clear, therefore, that the Tribunal failed to interpret the words of the exemption notification No. 201/79 properly and fully. The said notification exempted all excisable goods on which the duty of excise was leviable and in the manufacture of which any goods falling under Tariff Item 68 (i.e. inputs) had been used from so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of excise or chargeable to nil rate of duty. In the present case, the excisable goods, namely, polyester fibre were not wholly exempt from duty nor chargeable to nil rate of duty. It cannot be read in the notification that the notification would not be available in case non-excisable goods arise during the course of manufacture. In fact, the Tribunal seems to have erred in not bearing in mind that exemption notification was pressed in service in respect of polyester fibre, which is excisable goods and not in respect of methanol which arises as a by-product as a part and parcel of chemical reaction. It appears further on a comparison of the Rule 56A and the Notification No. 201/79 that these deal with the identical situation. The submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght in invoking Rule 57CC and in demanding payment at the rate of 8%. He has relied on the decision of this Tribunal in the case of Binani Zinc Ltd. v. C.C.E., Cochin - 2005 (187) E.L.T. 390 and in Indian Iron Steel Co. Ltd. v. C.C.E., Bolpur - 2002 (141) E.L.T. 695 in support of his contention. 8. It is to be firstly noted that Rule 57CC(1) is attracted only where two final products, one dutiable and the other non-dutiable are produced from the same modvated input. Similarly, occasion for varying Modvat credit taken on inputs arises under Rule 57C only where input is used in the manufacture of exempted final product. The position of by-product in the proforma credit scheme came up for consideration before the Apex Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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