(Per : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Department is in appeal against judgement of the Tribunal dated 15.07.2010 raising following question for our consideration:
"
Whether the CESTAT was right in law in holding that in terms of Rule-6 of Cenvat Credit Rules, 2004, contrary to the ratio laid down in the Judgements in cases of CCE Vs. Maruti Suzuki Ltd. reported in 2009(240) ELT 641 (SC) and CCE Vs. Gujarat Narmada Fertilizer Company Ltd. reported in 2009 (240) ELT 661 (SC), the Assessee was not required to pay Excise duty @ 10% of the value/price of the by-product namely Spent Acid, cleared by them without payment of Excise Duty while availing benefit of exemption under Notification No. 4/2006-CE dated 01.03.2006."
2. At the outset, learned counsel for the respondent appearing on caveat. Learned counsel for the appellant pointed out that the issue arising in the present tax appeal is similar to one decided by this Court in Tax Appeal No. 1714 of 2010 by an order dated 11.05.2011.
3. Learned counsel for the appellant was unable to draw any distinction between the two sets of facts. In our order dated 11.05.2011, we had dismissed the appeal of the department making following observations:
"Heard learned counsel for the parties.
Counsel for the Revenue was confronted with the decision of this Court in Tax Appeal No.1736 of 2009 wherein though the products under consideration were different, legal issue was similar. We find that a Division Bench of this Court in the case of Sterling Gelatin (Tax Appeal No.1736 of 2009 decided on 9.9.2010), was considering a product, i.e. mother liquor as a by-product in manufacture of gelatin. Referring to rule 6 of the Cenvat Rules, the Division Bench opined as under:
"8. Thus, on a plain reading sub-rule (1) of rule 6, it is apparent that CENVAT credit is admissible in respect of the inputs used in the manufacture of dutiable goods and is inadmissible on such quantity of inputs which is used in the manufacture of exempted goods. Sub-rule (2) imposes an obligation on the manufacturer who manufactures final products and exempted goods from the common input to maintain separate accounts for receipt, consumption and inventory of inputs. Examining the applicability of the aforesaid rules to the facts of the present case, as noted hereinabove, it is not as if more quantity of Hydrochloric Acid is used than that required for manufacturing Gelatin or that by using a smaller amount of Hydrochloric Acid, the production of Mother Liquor could be averted. In the manufacturing process adopted by the assessee, it is not possible to manufacture Gelatin without Mother Liquor coming into existence. Thus, when the entire quantity of input viz. Hydrochloric Acid is used in the manufacture of the final product being Gelatin which is a dutiable product, the mere fact that a by-product emerges during the process would not bring the by-product within the ambit of Rule 6 of the Rules so as to call for maintaining separate accounts in respect of the same. When the entire quantity of input is used in the manufacture of Gelatin, the question of maintaining separate accounts or of paying a percentage of the total price of the exempted goods would not arise. In the peculiar facts of the present case, sub-rule (1) of rule 6, itself would not come into play inasmuch the manufacturer does not deliberately use any quantity of the inputs, viz. Hydrochloric Acid for manufacturing Mother Liquor, the entire Hydrochloric Acid is used in the manufacture of Gelatin. Thus, when no input is specifically used for the purpose of manufacturing Di-Calcium Phosphate, there would be no question of maintaining separate accounts for receipt, consumption and inventory of input.
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13. Insofar as reliance placed upon the decision of the Bombay High Court in the case of Commissioner of Central Excise, Thane - 1 vs. Nicholas Piramal (India) Ltd. (supra) is concerned, the same would have no applicability to the facts of the present case inasmuch as in the facts of the said case, common input had been consciously used in the manufacture of two final products, whereas in the facts of the present case, the input Hydrochloric Acid is used for the manufacture of Gelatin alone, however during the course of manufacturing process a by-product viz. Mother liquor also emerges."
We are, of course, concerned with different products in the present case. The assessee in the process of manufacturing soap uses acid slurry and in the process Spent sulphuric acid gets generated as a bye product. Though the products may be different, the ratio laid down by this Court would apply to the facts of the present case. We, therefore, do not think that the Tribunal committed any error in holding against the revenue. Tax Appeal is therefore, dismissed."
4. In view of the above noted position, this tax appeal is dismissed.
[AKIL KURESHI, J.] [SONIA GOKANI, J.] JYOTI Top