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TMI Blog2011 (10) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... y the officers on 23.07.04 and after examining the manufacturing process of refining of oil and hydrogenation, it revealed that the appellant took the CENVAT Credit of duty paid of Caustic Soda, Phosphoric Acid, Hydrogen gas, which are used in refining process. During the process of refining, free fatty acids which are exempted goods, are generated in addition to the refined oil and hydrogenised vanaspati. These free fatty acids are commercially known as Soap stock. It was noticed that such soap stock were further used in the manufacture of another finished product viz. Acid Oil, which was cleared without payment of Central Excise duty by the assessee by availing benefit of exemption of Notification No.115/1975, dt.30.4.75 as amended from time to time. Show Cause Notices was served upon the appellant for recovery of 8% of the price of the exempted goods i.e. acid oil on the ground that the assessee was using common inputs for the manufacture of dutiable as well as exempted goods. One of the Show Cause Notice was also invoked the extended period for limitation of the demand of duty. After following the due process of law, the adjudicating authority confirmed the demand and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cid oil which is cleared by availing exemption of benefit of notification is cleared out of processing of soap stock. He would also draw our attention to Rule 6(2) and submits that the rule lays emphasis on the manufacture of final product which is chargeable to duty, as well as exempted goods. He would specifically draw our attention to Rule 2(d) of CENVAT Credit Rules and submit that the exempted goods and excisable goods which are exempted and which includes goods which are chargeable to Nil rate of duty. He would also draw our attention to the definition of final product and excisable goods and submit that dutiable and exempted goods are in the nature of final product. It is his submission that the soap stock which arises during the course of manufacture of refined oil and hydrogenised vanaspati is final product. It is his submission that the judgment of Hon'ble High Court of Mumbai in the case of in the case of Rallis India Ltd Vs UoI (supra), will not be applicable in this case as in that case the Hon'ble High Court was interpreting the provisions of Rule 57CC and Rule 57D which is not there on statute for the period in question in this case. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p stock in the market as a final product. As has already been recorded by us that the soap stock that arises during the course of manufacturing in the appellant-assessee's factory premises, is further processed, which yield acid oil which is cleared as final product by availing benefit of notification. At this stage, we find that co-ordinate Bench of the Tribunal in the case of CCE Hyderabad Vs Shree Siddhi Vinayaka Agro Extractions (P) Ltd. 2010-TIOL-183-CESTAT-BANG, in identical case had held that the soap stock which arises/emerges during refining of the edible oil is a Waste, though the Revenue in that case had called this product as by-product. In the case in hand, the appellant has been claiming it as a by-product. Be that as it may, there cannot be any dispute that the appellant is not manufacturing the soap stock from fatty acid. If the said soap stock is considered and held as waste by a co-ordinate Bench, it has to be considered as such. 9. We find that the Hon'ble High Court of Mumbai in the case of Rallis India Ltd Vs UoI (supra), has settled the law on this issue of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvat Scheme, credit of duty paid on inputs can be availed only if such inputs are used in the manufacture of dutiable final product. Where a manufacturer uses common inputs to manufacture both dutiable final product as well as exempted final product, then such manufacturer is required to reverse the credit to the extent the input is used in the manufacture of the exempted final product. Where separate account was not maintained or could not be maintained so as to ascertain the quantity of inputs used in the manufacture of exempted final product, there used to be difficulty in reversing the credit of duty taken on inputs used in the manufacture of exempted final product. To obviate this difficulty Rule 57CC was introduced. As per Rule 57CC, where a manufacturer manufacturing both dutiable final product as well as exempted final product fails to maintain separate account of inputs used in the manufacture, then, he is required to pay 8% of the value of the exempted final product at the time of its clearance from the factory. 26. In the present case, the mother liquor arising in the manufacture of gelatin is admittedly a waste on which no excise duty is payable. In spite of the fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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