ORDER

P.C. Jain, Member (T)

1. Facts of the case are that the appellants herein filed two classification lists - one for the period 1-4-1984 to 1-4-1986 and another with effect from 2-4-1986 - on 8-5-1987 for sulphuric acid used in silver Recovery Plant. It has been stated in the order-in-original, styled as Memorandum of Approval by the Proper Officer, dated 14-7-1987 that there is no meaning in approving the first classification list for the period 1-4-1984 to 1-4-1986 inasmuch as the appellant has sub motu paid the duty of Rs. 8,33,287.95 p. The second classification list effective from 2-4-1986 claiming the benefit of exemption notification 217/86 dated 2-4-1986 was modified by not accepting the claim of the appellant for benefit of the said notification on the ground that the input sulphuric acid is not liable to exemption because the final product silver is chargeable to nil rate of duty.

2. Learned advocate Shri Lakshmikumaran for the appellants has urged that the lower authorities have not appreciated the manufacturing process undertaken by the appellants. Their main product is zinc and other products are merely by-products of the processing of zinc ore concentrate. Silver Recovery Plant, though no doubt essential for separating silver, is equally essential for maximising the production of zinc the basic aim of the appellants as the name Hindustan Zinc Limited implies.

3. After the roasting of zinc ore concentrate in the form zinc sulphide and leaching thereof, neutral leach residue is obtained. Unreacted zinc and silver sulphides in this neutral leach residue would have been lost but for the process undertaken by the appellants, thereby causing loss of both zinc and silver. The appellants have enclosed a flow chart of their manufacturing process. It is reproduced in the Annexure.

4. An argument has been advanced that recovery of zinc from neutral leach residue at the 1st stage contains zinc ferrite, zinc sulphide (unreacted), silver sulphide etc. For maximum recovery of zinc, this residue is taken to the Residue Treatment Plant. Here process of floatation is adopted to separate zinc ferrite from zinc sulphide and silver sulphide. As part of Residue Treatment Plant, silver Recovery Plant has also been installed to separate zinc and silver from their sulphides through the processes of roasting and treatment with sulphuric acid and sodium chloride. Sulphates of zinc and of other metals (such as cadmium) obtained from silver Recovery Plant are taken to the conversion in the Jarosite Process meant for separating zinc and other metals from iron by treating zinc ferrite with ammonium sulphate and acid. Solution of sulphates of zinc and of other metals are again sent into Neutral Leaching. From this, through the processes in Thickener and by treatment with zinc dust and process of filteration , pure zinc sulphate solution is obtained. By process of electrolysis of pure zinc sulphate solution, zinc is obtained.

5. The department argues, on the authority of letter dated 28-2-1989, addressed to the Departmental Representative - copy of which has been taken on record - that floatation process undertaken by the appellants is a deviation from the normal process. Learned Chief Chemist's observation in this connection are reproduced below:-

"The need for subjecting the neutral leach residue to floatation thereby separating the sulphides of silver and zinc from zinc ferrites, then subjecting the separated sulphides to roasting, leaching, and precipitating the silver from the leach is neither mentioned in the literature on recovery of zinc, nor is explained in the technical literature of the party. The separation of the sulphides, which is an obvious deviation, from the conventional process of recovery of zinc, is apparently to avoid the loss of silver in jarosite waste solids. Moreover, silver does not find mention in the list of impurities which effect in zinc electro winning .

Therefore, I am of the opinion that the operations carried on the "30% concentrate" in the silver recovery plant, is for the recovery of silver and the zinc sulphate obtained after the isolation of silver by precipitation is only incidental."

6. Aforesaid arguments of the Department have been rebutted by the Learned advocate for the appellants on the authority of Kirk-O-thmer Encyclopedia of Chemical Technology. He states that page 819 (Vol. 24) of the said Encyclopedia clearly states that if neutral leach residue contains lead and silver, these are separated first. Therefore, separation of silver and zinc from the residue is not a deviation. In order to appreciate this argument, it is appropriate to reproduce the portion relied upon by the Learned advocate :-

"If the residue contains appreciable lead or silver, they are first separated to avoid loss to the jarosite waste solids. Minimum use of calcine in jarosite neutralisation is required for maximum recovery of lead and silver as well as zinc and other metals."

7. We have considered the pleas advanced on both sides. It is true that floation process is meant to separate sulphides of silver and zinc from the zinc ferrite, otherwise silver would have probably been lost in jarosite solid waste. It is, however, to be borne in mind that it is not only silver sulphide but zinc sulphide also is separated from zinc ferrite. One would therefore conclude, in the absence of anything to the contrary from the department, that not only silver but zinc in unreacted zinc sulphide in the leach residue would have been lost too but for the floatation process undertaken by the appellants. The process, therefore, appears to be a technological necessity to extract maximum zinc as far as possible.

8. In view of the foregoing discussion, we agree with the appellants' learned advocate that sulphuric acid used in the silver Recovery Plant is meant not only for separating silver but also for converting zinc oxide (converted from zinc sulphide on roasting) into zinc sulphate for ultimate conversion to zinc by electrolysis. Accordingly, the benefit of Notification No. 217/86 should be made available to the appellants with effect from 8-5-1987, the date of filing the classification list, in appeal No. 3313/87-C. A classification list can be approved only prospective to the date of filing thereof. If an assessee has not filed a classification list for a certain period, he has to bear the consequences, if any, in terms of the law.

9. As regards the 2nd appeal E/1929/88-C pertaining to classification list for the period 1-4-1984 to 1-4-1986, we observe from the impugned order that the learned lower appellate authority has not discussed anything at all about this aspect. We also do not know what points were taken by the appellants herein before the Collector (Appeals) in connection with the said classification list effective from 1-4-1984 to 1-4-1986. Collector (Appeals), is directed to pass a speaking order on the appeal filed before him on the said classification list.

10. The two appeals are disposed of as above.