The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), granted customs duty exemption on oxygen used in manufacture of sulphuric acid, thereby granting relief to Hindalco Industries Limited, the appellant.
The appellant is engaged in manufacture of Copper Cathodes, Continuous Cast Copper Rods, Sulphuric Acid and Phosphoric Acid etc falling under CETH 74228 of Central Excise Tariff Act, 1985. The appellant has an oxygen gas producing plant within their factory premises and oxygen produced in the oxygen plant is further used in manufacture of Copper Cathodes and Sulphuric Acid.
It has been contention of the department that since the final product namely Sulphuric Acid is exempted from Central Excise Duty, the appellant should have discharged the duty on their intermediate product namely oxygen gas which is captively consumed by them. The department contended that exemption Notification No. 67/95- CE dated 16.03.1995 is not available to the oxygen gas since the same is used in the manufacture of exempted Sulphuric Acid.
The issue which is before the Tribunal to answer is whether the oxygen captively consumed in the manufacture of dutiable Copper Cathodes as well as exempted Sulphuric Acid can be denied the benefit of exemption Notification No. 67/95- CE dated 16.03.1995.
In the case of Union of India Vs. Hindustan Zinc Ltd, it was held that “In the present case, the appellant manufactured oxygen used in the manufacture of excisable product and they had no obligation to maintain separate accounts for oxygen used in the manufacture of Sulphuric Acid. It is established that appellant did not use oxygen produced in the manufacture of Sulphuric Acid. Accordingly, conditions of Notification No. 67/95 are complied. We hold that appellants are eligible for benefit of Notification No. 67/95 and the duty demand on the quantity of oxygen so used in the manufacture of sulphuric acid, is liable to be set aside.”
A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member concluded by noting that “Since the facts of the matter at hand are similar to the one decided by this Tribunal on the basis of Apex Court decision in the case of Hindustan Zinc, we follow the same and hold that impugned Orders-In-Original are without any merit and we set aside the same.”
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