TMI Blog2006 (12) TMI 162X X X X Extracts X X X X X X X X Extracts X X X X ..... he resultant Phosphoryl 'A' 'B', without the use of HCL. As long as it is held that HCL is used in the manufacture of Phosphoryl 'A' 'B', the applicability of provisions of Rule 57CC cannot be ruled out. The issue in the instant case is not relatable to reversal of the credit originally taken by the appellant on the ground of emergence of any by-product. The issue before us is a straight and simple interpretation of Rule 57CC, which as already held does not make any distinction between exempt final product or exempt by product. As along as the excisable product cleared from the assessees factory enjoys exemption or attracts nil rate of duty, provisions of Rule 57CC will come into play. T he straight answer to the above question lies in the literal interpretation of the language employed in the said Rule without straining to find out the legislative intent, especially when the language used is unambiguous. As already observed, the provisions of Rule 57CC or Rule 6 envisage common use of inputs in two final products i.e. one dutiable and other exempted, for the applicability of the same. As such, we are of the view that as long as two final p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther processed to obtain Phosphoryl A and Phosphoryl B which are classifiable under Heading 2302 of the Central Excise Tariff Act, 1985 attracting nil rate of Central Excise Duty. 3. The Modvat credit availed by the appellant on HCL was being used by them for discharge of duty leviable on Gelatin. However, Revenue was of the view that inasmuch as, the said HCL is being used for manufacture of gelatin as also for manufacture of phosphoryl, which is an exempted product, the appellants are liable to reverse an amount of 8% of the value of the said exempted goods. Accordingly, proceedings were initiated by way of issuance of different show cause notices, which culminated into the impugned order passed by Commissioner of Central Excise confirming demands and imposing penalties. On hearing the appeal against above order, Referral Bench noticed conflicting views of the Tribunal and accordingly referred the matter to Larger Bench. 4. We have heard Shri V. Sridharan, ld. Advocate appearing for the appellant and Shri Promod Kumar ld. JDR appearing for the Revenue. 5. The appellants main contention is that the mother liquor, which is further used in the manufacture of Phosphoryl A and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the manufacture of gelatin and emergence of mother liquor at that stage is incidental. Mother liquor is in the nature of a by product and hence cannot be considered to be a final product manufactured by the appellant. Our attention has already been drawn to the provisions of Rule 57C as also to Rule 57D, which prescribe that no part of the input credit would be denied or varied on the ground that the part of the inputs is contained in waste or scrap arising during the course of manufacture of the final product. It has been contended that when Rule 57C is not applicable, provisions of Rule 57CC cannot be invoked against the appellant. Similarly, provisions of Rule 57CC cannot be interpreted in such a way so as to nullify Rule 57D, which is a shield given to the assessee and could not be transformed into a sword. Our attention has also been drawn to the definitions of the expression by-product and various other technical definitions have been referred to. Accordingly, ld. Advocate has prayed that the decisions which are in favour of the appellant laying down that Rule 57CC will not apply to by products, should be concurred with. 7. As against the above ld. DR appearing for the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icals. The above stand of the appellant was accepted by the Hon'ble Supreme Court. As such, it is seen that even according to the appellant, HCL is not a necessary and fundamental input for the manufacture of gelatin, which can be obtained even without the use of the same. This leads to the evident position that HCL is used for extracting the inorganic part of the bones, which are further converted into Phosphoryl 'A' 'B'. As such, it has to be held that HCL is used in the manufacture of Phosphoryl 'A' 'B' irrespective of emergence of mother liquor in between. 9. The said Phosphoryl 'A' 'B' are excisable products classifiable under Chapter 23 of the Act. It is not the appellants claim that the said products are by-product. Admittedly, the same are consciously manufactured products. They are arising regularly and continuously, along with the manufacture of gelatin and are being regularly sold by the appellant. Their emergence has to be treated as a result of intended manufacture and not as unwanted product. The Hon'ble Supreme Court's in the case of Commissioner of Sales Tax, Bombay v. Bharat Petroleum Corporation Ltd. [1995 (77) E.L.T. 790 (S.C.)] has observed that where a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal decision in the case of Indian Iron Steel Co. Ltd. v. Commissioner of Central Excise, Bolpur [2002 (141) E.L.T. 695 (Tri.-Kolkata)] and in the case of Binani Zinc Ltd. v. Commissioner of Central Excise, Cochin [2005 (187) E.L.T. 390 (Tri.-Bang.)]. The ratio of these two decisions is that the provisions of Rule 57CC are applicable irrespective of the nature of the final product i.e. whether intended final product or a by-product or a subsidiary product. 12. We have already reproduced Rule 57CC and Rule 6 in the previous paragraphs. As is clear from the reading of the said Rule the same applies to the final product, dutiable or exempted and makes no distinction between a intended final product or unintended emergence of by-product. The said rule in simple terms, requires the assessee to pay an amount equal to 8% of the value of the goods cleared at nil rate of duty, even where the inputs have been used directly or indirectly in the manufacture of such final product. As we have already held that HCL has been used in the manufacture of final product Phosphoryl 'A' 'B', which attract nil rate of duty, the provisions of Rule 57CC would apply. As observed by the Bench in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h electrolysis was an unintended product and even if the same is being sold as exempted product, the same should be treated as by-product and Rule 57CC would not apply? The answer to above question is a clear 'No'. 14. The issue in the instant case is not relatable to reversal of the credit originally taken by the appellant on the ground of emergence of any by-product. The issue before us is a straight and simple interpretation of Rule 57CC, which as already held does not make any distinction between exempt final product or exempt by product. As along as the excisable product cleared from the assessees factory enjoys exemption or attracts nil rate of duty, provisions of Rule 57CC will come into play. The straight answer to the above question lies in the literal interpretation of the language employed in the said Rule without straining to find out the legislative intent, especially when the language used is unambiguous. As already observed, the provisions of Rule 57CC or Rule 6 envisage common use of inputs in two final products i.e. one dutiable and other exempted, for the applicability of the same. As such, we are of the view that as long as two final products emerging out of us ..... 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