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2006 (8) TMI 459 - AT - Central Excise
Issues: Eligibility of Cenvat credit on furnace oil used in the manufacture of pig iron waste products like blast furnace slag and coke breeze.
Analysis: The case involved the eligibility of Cenvat credit on furnace oil used in the production of pig iron waste products like blast furnace slag and coke breeze. The appellants, manufacturers of pig iron, availed Cenvat credit on the furnace oil used as fuel in the factory. The contention of the department was that since un-granulated slag and coke breeze attract nil rate of duty, the appellants were not entitled to Cenvat credit on the quantity of furnace oil used in their manufacture. The Deputy Commissioner and the Commissioner (Appeals) had confirmed the demand for Cenvat credit on the furnace oil. The appellants argued that blast furnace slag and coke breeze were not final products but waste materials arising as by-products during the pig iron manufacturing process. They cited legal precedents and circulars to support their stance. They referred to the decision in JSW Steel Limited v. CCE, Belgaum, which upheld the view that slag is not excisable goods. Additionally, they relied on cases such as CCE, Surat v. United Phosphorus Ltd., Tata Metaliks Ltd. v. CCE, Kolkata-II, and Hindustan Zinc Ltd. to establish that slag is a waste product during pig iron manufacture. The appellants also pointed to Board circulars clarifying that slag generated in certain manufacturing processes should not result in denial of duty on inputs. Furthermore, they cited a CBEC circular stating that coke breeze should be treated as a process waste due to its adverse effects on the manufacturing process. After considering the submissions made by the appellants and the legal precedents cited, the judge concluded that no demand for Cenvat credit on the input was sustainable. The judge deemed the impugned orders passed by the authorities below as erroneous and set them aside. Consequently, the appeals were allowed, with any consequential relief granted to the appellants.
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