TMI Blog2019 (6) TMI 1614X X X X Extracts X X X X X X X X Extracts X X X X ..... completely utilized for production of coke and no part thereof forms a part of the coal gas or coal tar, which inevitably comes into existence as a technological necessity. Here also the appellant cannot use lesser quantity of coal only to produce coke and not produce coal gas or coal tar. Hence, it has to be concluded that the appellant has consumed the entire quantity of coal in the production of coke. Further, merely because coal tar is recovered by a recovery process in the coke plant, from the mixtures of the several by products which arise in the course of production of coke from coal, as and by way of technological necessity, the same cannot and does not become a final product. The provisions of Rule 6(3)(b) of the Cenvat Credit Rules are inapplicable to the instant case and, consequently, the appellant is not required to make payment of any amount contrary to what has been held in the impugned order - appeal allowed - decided in favor of appellant. - Excise Appeal No.66/2010 - A/76193/2019 - Dated:- 26-6-2019 - SHRI P.K. CHOUDHARY, JUDICIAL MEMBER AND SHRI P. VENKATA SUBBA RAO, TECHNICAL MEMBER Dr. Samir Chakraborty, Sr. Advocate Sri Abhijit Biswas, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid on various common input services (from September, 2005), used directly or indirectly in or in relation to manufacture of both dutiable and the aforesaid exempted goods, and had utilized such credit for payment of duty on various dutiable final products but neither maintained separate account of such common inputs nor paid amounts equal to 8% or 10%, as applicable, of the total price of the exempted goods (excluding sales tax and other taxes), in terms of Rule 6(3)(b) of the Cenvat Credit Rules, inspite of the same being payable by it. On the aforesaid allegation, relying upon the decision of the Larger Bench of the Tribunal in Rallies India Ltd. Vs. Commissioner of Central Excise- 2007 (208) ELT 25 (T-LB), a show cause notice was issued, which resulted in the impugned order. 5. Heard both sides at length and perused the appeal records. 6. It is the contention of the appellant that both coal tar and coal gas which came into existence during the course of manufacture of coke, which in turn is used in the manufacture of dutiable steel and steel products in the steel plant, are byproducts and that this fact has been acknowledged in the show cause notice and in the relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... industan Zinc Limited (supra) and the Bombay High Court in the case of Rallies India Limited (supra) have since been followed in, inter alia, the following decisions: (i) Sai Sulphonate (P) Ltd. Vs.Commissioner of C.Ex.,-2017 (345) ELT 156 (T) (ii) Salasar Sponge and Power Ltd. Vs. Commissioner of C.Ex., 2017 (47) STR 227 (T) (iii) Commissioner of C.Ex. ST Vs. Aarti Sponge Power Ltd.-2016 (333) ELT 415 (T); (iv) Commissioner of Central Excise Vs. Hi-Tech Carbon-2018 (17) GSTL 398 (AB) 7. On behalf of the Revenue, besides reiterating the findings of the Commissioner, it has been contended that the expression byproduct has to be understood applying the principle of ejusdem generis and that on such interpretation it has to relate to material which are akin to waste and refuse , contained in the phrase waste, refuse or byproduct . According to learned Special Counsel, neither coal gas nor coal tar, which are both marketable commodities and regularly sold as such by the appellant is a byproduct. They are final products which are exempted from duty and therefore the provisions of Rule 6(3)(b) of the Cenvat Credit Rules are applicable, the appellant not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not, in any event, mean final products . This Rule only means that Modvat Credit cannot be denied on the ground that in the course of manufacture, non excisable goods also arise. 22. Elaborating this contention, the learned Solicitor General submitted that the words final products in the context of Modvat and Cenvat Credit have to be understood giving the meaning as assigned to it in the Modvat/Cenvat Rules. Rule 57A inter alia states that the provisions of this Section shall apply to such finalized excisable goods (referred to in that section as final products). Again Rule 2 (c) of the Cenvat Credit Rules, 2002 defines final products as meaning excisable goods manufactured or produced from inputs except matches. Rule 2(h) of the Cenvat Credit Rules, 2004 defines final products as meaning excisable goods manufactured or produced from input, or using in input service. Thus, final products referred to in the aforesaid provisions can only mean to be excisable goods produced or manufactured. In the present set of cases, sulphuric acid, caustic soda flakes, trichloro ethylene and Phosphoryl A and Phosphoryl B are excisable goods manufactured and produced in India falling under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Methanol and proportionate credit taken on ethylene glycol was to be reversed. This Court ruled that 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 these appeals appear to be identical to the facts and the law laid down in Swadeshi Polytex (supra). Therefore, this judgment is squarely applicable. 26. Furthermore, the provisions of Rule 57CC cannot be read in isolation. In order to understand the scheme of Modvat Credit contained in this Rule, a combined reading of Rule 57A, 57B and 57D alongwith Rule 57CC becomes inevitable. We have already reproduced Rule 57D above. It can be easily discerned from a combined reading of the aforesaid provisions that the terms used are inputs , final products , by-product , waste products etc. We are of the opinion that these terms have been used taking into account commercial reality in trade. In that context when we scan through Rule 57CC, reference to final product being manufactured with the same common inputs becomes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nc concentrate in the production of zinc. 9.2.1 On application of the afore quoted observation of the Hon ble Supreme Court to the instant case, we find that herein also it is an undisputed fact that the entire quantity of coal is completely utilized for production of coke and no part thereof forms a part of the coal gas or coal tar, which inevitably comes into existence as a technological necessity. Here also the appellant cannot use lesser quantity of coal only to produce coke and not produce coal gas or coal tar. Hence, it has to be concluded that the appellant has consumed the entire quantity of coal in the production of coke. Further, merely because coal tar is recovered by a recovery process in the coke plant, from the mixtures of the several by products which arise in the course of production of coke from coal, as and by way of technological necessity, the same cannot and does not become a final product. It would be not out of place to mention that not every coke oven plant is capable of recovering coal tar/coal gas in the process. 10. Respectfully following the above decision of the Hon ble Supreme Court, which as discussed above, fully applies to the instant case, w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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