TMI Blog2001 (4) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... f a solution of ammonium sulphate in water, containing traces of nitric acid (one of the chemicals used in manufacture) emerges as a by-product. The manufacturer obtains ammonium sulphate (still containing traces of nitric acid) by removal of water from the solution. The appellant cleared this ammonium sulphate without payment of duty under Notification 8/96 which unconditionally exempted it from duty. 2.A notice issued on 31-3-1997 alleged that since the manufacturer clears ammonium sulphate, one of its final products, without payment of duty the provisions of Rule 57CC would apply, and therefore proposed to recover from it 8% of the sale price of ammonium sulphate, by applying sub-rule (1) of this rule. In its reply to the notice, the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the said by-product ammonium sulphate is leviable to nil rate of duty." 5.The essence of the scheme of Modvat, as contained in Section AA of Chapter of the Central Excise Rules, is that duty paid on goods which are used further for the manufacture of other excisable goods can be used towards the duty payable on such other goods. Rule 57A defines inputs as "goods used in or in relation to the manufacture of final product," which it in turn defines as "finished excisable goods." Going by this definition, any goods emerging from a manufacturing process, whether the final product that the manufacturer set out to produce, or incidental or unavoidable by-product, waste, refuse would all be final product so long as they are excisable. Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) M-107-111] to attribute the necessity for the rule of the complicated nature of the procedure being followed to the reversal of the credit subsequent to it being taken, and the difficulty in determining whether the credit has been correctly reversed to the required extent or not. 7.Sub-rule (1) of Rule 57CC, with which we are concerned, provides, inter alia, that no credit shall be allowed on such quantity of inputs which are used in the manufacture of final products on which no duty is payable, except when the final products are cleared to a unit in a Free Trade Zone, a hundred per cent export-oriented undertaking, a unit in an Electronic Hardware Technology Park or Software Technology Park, or supplied to the United Nations or an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be paid. In any event, that duty is a duty payable in terms of Section 3 of the Act. The amount required to be deposited in terms of Rule 57CC (1) has nothing to do with that duty. It has no relation to the value under Section 4 of goods or for the credit taken on them. It is in fact not duty at all, as held by the Board in its Circular B-42-1-96, dated 27-9-1996 reproduced in 1996 (17) RLT M-17. There is therefore absolutely no basis in the appeal and for the Commissioner (Appeals) order. This alone should be enough to dispose of the appeal. However, even on the assumption (which appears, although not very clearly, in the department's appeal) that even in the case of by-product, Rule 57CC would apply, we are still unable to accept the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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