TMI Blog2015 (11) TMI 1247X X X X Extracts X X X X X X X X Extracts X X X X ..... Smelter and Convertor of copper and it stipulates that waste gases are to be utilized in the manufacture of Sulphuric Acid so as to prevent emission of Sulphur Dioxide. - as per Notfn 67/95, both input oxygen and the final products are rightly covered in the Table of the Notification. Proviso (vi) of the notification stipulates that this notification is applicable provided appellant complied with Rule (6) of CCR 2001. The only condition is that Sub-Rule (2) of Rule 6 of CCR is required to be complied with. In the present case, as per sub-rule (2), appellant manufactured oxygen used in the manufacture of excisable product and they had no obligation to maintain separate accounts for oxygen used in the manufacture of Sulphuric Acid. It is established that appellant did not use oxygen produced in the manufacture of Sulphuric Acid. Accordingly, conditions of Notfn 67/95 are complied. Following the Apex Court decision in the case of UOI Vs Hindustan Zinc Ltd. (2005 (2) TMI 119 - SUPREME COURT OF INDIA), we hold that appellants are eligible for benefit of Notfn 67/95 and the duty demand on the quantity of oxygen so used in the manufacture of sulphuric acid, is liable to be set aside. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty during the period March 2002 to June 2007 and also imposed equivalent penalty under Rule 25 of CER 2002 read with Rule 173Q of erstwhile CER 1944. Hence the present appeal. 3. Learned Advocate appeared on 30.10.2015 and explained the process of manufacture of Copper Anode from copper concentrate and also submits that for manufacture of copper anode, they require oxygen and they produce oxygen gas in their own plant and captively consumed in the manufacture of copper anode. He submits that while manufacturing copper anode, various waste gases viz. i.e. Sulphur Dioxide (SO2), Iron Oxide emerges out on account of removal of impurities contained in the copper concentrate. In terms of the Environment (Protection) Rules, 1986, Sulphur Dioxide and Iron Oxide cannot be let off in the atmosphere and they have to concert the Sulphur Dioxide into sulphur Trioxide (SO3) which is again finally converted into Sulphuric Acid (H2SO4). He further submits that oxygen produced in the plant are used exclusively in the manufacture of copper anode and not used in the manufacture of sulphuric acid at any stage. Therefore, he submits that oxygen produced in their plant is not an essential input us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s again converted into sulphuric acid. Therefore, sulphuric acid is not a final product but it is only a by-product. 3.3 He further referred to para-13 of the first OIO dt. 12.8.2003 on the marketability. He submits that oxygen produced in their plant is not marketed and it is used only for purification of copper concentrate. In order to make oxygen marketable, it requires further purification and further infrastructure which they do not have in their existing unit and since they have not intended for sale of oxygen, there is no question of clearance of oxygen. He also relied on the following decisions :- (1) Ambuja Cement Ltd. Vs CCE Supreme Court judgement dt. 21.8.2015 (2) Ultratech Cements Ltd. Others Vs CCE 2015-TIOL-2110-CESTAT-MAD (3) Hindustan Zinc Ltd. Vs CCE 2005 (181) ELT 176 (SC) 4. On the other hand, Ld. A.R reiterated the findings of OIO and explained the marketability of oxygen. He submits that oxygen is used in the manufacture of copper concentrate by which SO2 emerges which in turn is converted into sulphuric acid. Since Sulphuric acid is cleared without payment of duty under exemption Notfn 67/95, appellants are not eligible for Notfn 67/95 for av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per Environment (Protection) Rules, 1986, it is a mandatory requirement of appellant unit to process the harmful gases without letting out in the atmosphere. Further, as evident from their reply to SCN before adjudicating authority that oxygen is so generated in the plant is captively consumed only in the process of conversion of copper concentrate to copper anode and not in the manufacture of Sulphuric Acid. 8. During the process of conversion of SO2 to SO3, one more element of oxygen is added and this additional element of oxygen is not taken from the oxygen plant but from the atmosphere. The Sulphur Dioxide (SO2) combines with atmospheric oxygen and gets converted into Sulphur Trioxide (SO3). This Sulphur Trioxide is absorbed in Sulphuric Acid to form Oleum. This super-saturated Oleum is dissolved in water to produce 98% pure Sulphuric Acid (H2SO4) i.e. the fourth element of oxygen is derived from water. This fact is easily verifiable from the manufacturing process. It is evident that oxygen produced in their plant is captively consumed and used only in the copper concentrate for purification and not diverted elsewhere for process of conversion of SO2 or SO3 or to Sulphur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No. 2337 of 2011, the product is again sulphuric acid and in the case of Civil Appeal No. 5322 of 2010 and the other connected matter of M/s. Rallis India Ltd., it is Phosphoryl A and Phosphoryl B. The issue is as to whether the assessees (respondents) are entitled to Modvat/Cenvat credit on inputs used in the manufacture of the aforementioned exempted (or subject to NIL rate of duty) final products. .... .... .... 16. Before we advert to the interpretations of the aforesaid provisions and to discuss the argument of the Union of India as to whether literal interpretation is to be given to Rule 57CC, it would be necessary to understand the properties of sulphuric acid. From what is explained above including the use of sulphuric acid for the production of zinc, it becomes apparent that sulphuric acid is indeed a by-product. In fact, it is so treated by the respondents in their balance sheet as well as various other documents which were filed by the respondents in the courts below. It is also a common case of the parties that Hindustan Zinc Limited and Birla Copper were established to produce zinc and copper respectively and not for the production of sulphuric acid. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 57CC on exempted sulphuric acid is not attracted. .... ..... ..... 25. These arguments may seem to be attractive. However, having regard to the processes involved, which is already explained above and the reasons afforded by us, we express our inability to be persuaded by these submissions. We have already noticed above that in the case of Birla Copper (C.A. No. 2337 of 2011) the Tribunal has decided the matter following the judgment in the case of Swadeshi Limited (supra). In that case, Ethylene Glycol was reacted with DMT to produce polyester and ethanol. Methanol was not excisable while polyester fibre was liable to excise duty. Credit was taken of duty paid on ethylene glycol wholly for the payment of duty on polyester. The department took a position that ethylene glycol was used in the production of methanol and proportionate credit taken on ethylene glycol was to be reversed. This Court ruled that the emergence of methanol was a technological necessity and no part of ethylene glycol could be said to have been used in production of methanol and indeed it was held that the total quantity of ethylene glycol was used for the production of polyester. The fact in all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt decision cited supra dealt with the identical issue of conversion of Sulphur Dioxide and Sulphur Trioxide into sulphuric acid and held it is only a by-product and not final product. 9. Further, we find this Tribunal Bench in an identical issue of captive consumption notification 67/95 in the case of Ultratech Cement and Others Vs CCE 2015 TIOL-2110-CESTAT-MAD had allowed the benefit of notification No.67/95-CE. 10. Further, we find that as per Notfn 67/95, both input oxygen and the final products are rightly covered in the Table of the Notification. Proviso (vi) of the notification stipulates that this notification is applicable provided appellant complied with Rule (6) of CCR 2001. The only condition is that Sub-Rule (2) of Rule 6 of CCR is required to be complied with. In the present case, as per sub-rule (2), appellant manufactured oxygen used in the manufacture of excisable product and they had no obligation to maintain separate accounts for oxygen used in the manufacture of Sulphuric Acid. It is established that appellant did not use oxygen produced in the manufacture of Sulphuric Acid. Accordingly, conditions of Notfn 67/95 are complied. By respectfully following th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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