Commissioner of Central Excise vs Andhra Paper Mill Ltd.

B. Prakash Rao, J.—Heard Sri A. Rajasekhara Reddy, learned Assistant Solicitor General of India, and Sri V. Srinivas, learned counsel appearing for the respondent-assessee.

This Appeal is, u/s 35G of the Central Excise Act, 1944, at the instance of the Commissioner of Central Excise, Visakhapatnam-II, against the orders passed by the Customs, Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore, dismissing their appeals and confirming the orders, dated 8-10-2007 and 8-8-2007 in the Appeals in favour of the assessee rejecting the claim as set forth by the appellant for the liability as against the assessee.

Briefly the facts are that after the assessee has received chlorine gas in cylinders, it was found that a portion of chlorine was left out in the cylinders and therefore, the demand was made by the department to such remaining quantity of chlorine which gets returned to the supplier on return of the cylinder. Since it is back with the assessee and as such he liable for the tax is the claim by the department. The said claim was negatived by the authorities including the appeals by the placing reliance on Hindustan Lever Ltd. v. CCE Mumbai 2004 (166) E.L.T. 273 (Tri.-Mumbai), a Judgment of the Tribunal of Mumbai, wherein it has been held that part of inputs washed away and not used in the manufacture of finished products since they settle down as insoluble residue in transit and duty having been paid on entire consignment, the assessees are eligible for the Cenvat credit. Following the aforesaid decision of the Tribunal of Mumbai, both the appeals were dismissed. Hence, the present Appeal.

There is no dispute in regard to the aforesaid fact and also the principles as laid down by the Tribunal in the said decision. We have perused the decision of the Tribunal, and the facts therein are quite similar and the ultimate conclusion is squarely applicable to the present one. Nothing has been pointed out to make any distinction nor any other reason is shown much less any authoritative binding precedent to come to a different conclusion.

In support, on behalf of the respondent-assessee, reliance is placed in 2005 (184) ELT 261 , a Judgment of the Tribunal of Mumbai, wherein it was held that:

Cenvat/Modvat - Part of chlorine gas (about 10%) flamed out in atmosphere after scrubbing with solution of caustic soda Lye/Flakes out of total amount of chlorine gas, deemed as used in manufacturing process and eligible for Modvat credit - Rule 57A of erstwhile Central Excise Rules, 1944 -Rules 2(k) and 3 of Cenvat Credit Rules, 2004. - Basing on the technical note it is observed that liquid chlorine is received in containers and used with reactor to make aluminium chloride. A small amount of air or chlorine which has not reacted is then led to a buffer for recovery of left over particles of aluminium chloride and then the effluent gases are led to the scrubbing tower, where alkaline solution of caustic soda is used to neutralize the chlorine gas. In view of the technical process involved in the manufacture of aluminium chloride as supported by the Analyst report, it is to be observed that chlorine gas is scrubbed with solution of caustic soda and there being any chance of its escape in the atmosphere and thus is deemed as used in the manufacturing process. Therefore, Modvat credit is admissible 2004 (166) ELT 254

Similarly another decision is also relied on behalf of the respondent-assessee in 2004 (166) ELT 254 , wherein the Tribunal of Delhi, while considering the Cenvat/Modvat and the processing loss, held that gases lost during manufacturing process to be considered as used in or in relation to manufacturing process.

In view of the aforesaid principles with which we are in agreement with its entirety, it cannot be said that there is any other question, either on facts or on law, arises to warrant interference. Hence, we do not find any merits in this appeal.

The Appeal is, accordingly, dismissed. No order as to costs.