Mahesh Chemicals Allied Industries Vs Commissioner of Central Excise and Central Goods & Service Tax (CESTAT Chandigarh)
Material Facts
The appellant, a manufacturer of Zinc Ingots and Zinc Sulphate fertilizer, challenged a common order confirming a demand of Rs.71,68,232 along with interest and equivalent penalty. The order also appropriated Rs.1,61,30,759 under Section 11D(1A) of the Central Excise Act, 1944 read with Sections 142(6)(a) and 174 of the CGST Act, 2017, and imposed a penalty of Rs.5,00,000 on the partner under Rule 26 of the Central Excise Rules, 2002.
The DGGI initiated an investigation after recording that zinc skimming was pulverized into zinc metal and zinc ash. Zinc metal was converted into zinc ingots, while zinc ash was either captively consumed for manufacture of zinc sulphate or sold on payment of Central Excise duty.
The Department relied upon the Supreme Court’s decision in Union of India v. DSCL Sugar Ltd. and CBIC Circular No.1027/15/2016-CX dated 25.04.2016 to contend that zinc ash was a non-excisable by-product which should be treated as exempted goods for Rule 6 purposes. It alleged that the appellant had neither maintained separate accounts nor reversed CENVAT credit under Rule 6(3), and also sought appropriation of duty collected under Section 11D.
