The central legal point established in the judgment is the interpretation and application of Rule 57CC of the Central Excise Rules 1944, specifically regarding the usage of cenvated inputs in the manufacture of exempted final products. The judgment emphasizes the need for consistency in the application of the law and the relevance of previous decisions in similar cases.

K. RAVICHANDRABAABU, J.

1. In all these appeals, the issue involved are one and the same and common. It is represented by the learned counsels appearing in all these matters that the decision to be rendered in C.M.A.No. 2071 of 2005 will cover the other appeals. Therefore, the first case, viz., C.M.A.No. 2071 of 2005 is taken up for consideration.

2. The Revenue is on appeal against the final order passed by the CESTAT, South Zonal Bench, Chennai in No.1040 dated 1.12.2003.

3. Case of the Revenue:-

The first respondent is the manufacturer of Sugar, Molasses and Denatured Ethyl Alcohol. It was noticed by the preventive Officers that the first respondent manufactured Bio-compost fertiliser falling under Chapter Heading 3105.00 of the Central Excise Tariff Act, 1985 and availed credit of duty on inputs viz., Molasses, Acetaldehyde, Benzene and Toluene, Tyridin, Light Taoutchocine, Sulphuric Acid, Chloroform and Methonol which are the common inputs for both Bio-compost fertiliser as well as Denatured Ethyl Alcohol. Bio-compost fertiliser is exempted from payment of duty vide Notification No. 8/96 dated 23.7.1996 etc., whereas Denatured Ethyl Alcohol is a dutiable product. During the course of manufacture of sugar, a waste product called Press mud emerged and during the manufacture of denatured ethyl alcohol, another bi-product viz., spent wash emerged. The press mud and spent wash were treated together for about 40 days and out of such treatment, an organic manure viz., Bio-compost emerged. The said organic manure is sold as "Farm boon" and "Garden bloom" by the first respondent. On further verification of the lab report, in respect of spent wash, it was noted that the same contained chemicals such as chlorides, sulphides, di-phosphates, potassium, sodium and nitrogen. Thus, from the lab report of the final product viz., "Farm boon" and "Garden bloom", it was noted that the above said chemicals were present in those final products. The first respondent manufactured and cleared bio-compost fertiliser during the period from 21.8.1996 to 28.3.2000 without following the Central Excise Procedures.

4. As per the provisions of erstwhile Rule 57A of the Central Excise Rules, 1944, an amount at the rate of 8% of the price of the final product charged for the sale of bio-compost fertiliser, at the time of clearance from the factory, is payable by the first respondent. A show cause notice was issued to the first respondent demanding the amount at the rate of 8% as stated supra by invoking the extended period of limitation as the first respondent suppressed the fact of clearance with an intention to evade payment of the duty. The first respondent replied to the show cause notice and denied its liability. After due process of law, the adjudicating authority confirmed the demand vide its Order in original dated 20.9.2000

5. Aggrieved by the said order, the first respondent preferred an appeal before the CESTAT. By an order dated 1.12.2003, which is impugned in this appeal, the Tribunal allowed the appeal and set aside the demand. The Revenue by challenging the said order of the Tribunal, filed the above appeal and raised the following substantial questions of law:-

1. Whether the Tribunal is correct in holding that the inputs used in the manufacture of Denatured Ethyl alcohol are not used in the non-duty paying product (Bio-compost fertiliser)?

2. Whether the Tribunal is correct in holding that the provisions of erstwhile Rule 57CC Central Excise Rules, 1944 is not applicable in this case?

6. Mr. K. Ravi Anantha Padmanaban, learned Senior Central Government Standing Counsel appearing for the Revenue submitted as follows:-

i) Credit of duty is permissible not only when the inputs are used directly in the manufacture of final product but also when the same is used in relation to the manufacture of final product.

ii) The credit availed chemicals were used in the course of manufacture of sugar. Pursuant to its utilisation various fina