2007 (9) TMI 70 - AT - Central Excise

Cenvat/Modvat Revenue demanded for 8% of the sale price of gypsum and garnet which arise in the course of manufacture respectively salt and Ilmenite but as per appellant the gypsum and garnet is the waste product and non marketable and do not attract the provision of Rule 6(3)(b) of the CCR,2002/2004 - Held demand not sustainable

Summary

Issues:
1. Interpretation of Rule 6(3) of the Cenvat Credit Rules, 2002 regarding the recovery of 8% of the sale price of gypsum and garnet.
2. Determination of whether garnet and gypsum are marketable waste products and subject to excise duty under Rule 6(3)(b) of CCR.
3. Analysis of whether waste products emerging in the manufacture of final products using common inputs attract the provisions of Rule 6(3)(b) of CCR.
4. Consideration of the appeal filed by the Revenue against the impugned orders setting aside the demands for payment related to garnet and gypsum.

Analysis:
1. The appeal filed by the Revenue challenged the impugned orders setting aside demands for payment related to gypsum and garnet arising during the manufacture of salt and Ilmenite. The original authority had demanded 8% of the sale price of these waste products, invoking Rule 6(3) of the Cenvat Credit Rules, 2002. The Commissioner (Appeals) found that garnet and gypsum were waste products, akin to press mud, and not marketable or excisable. Relying on a Circular of the Board and a Supreme Court judgment, the Commissioner vacated the original orders.

2. The ld. SDR contended that despite being waste products, garnet and gypsum were marketable and thus liable for excise duty under Rule 6(3)(b) of CCR. The argument was that the impugned products, though waste, were still subject to duty. However, the Commissioner had found that these waste products were not marketable and hence not excisable, leading to the orders being set aside.

3. The counsel for the respondents argued that even if exempted byproducts emerged in the manufacturing process, excise law did not necessitate payment under Rule 6(3)(b) of CCR for their clearance. Citing a Tribunal decision, it was contended that if exempted byproducts manufactured using common inputs were removed, Rule 6(3)(b) was not attracted. The Tribunal had previously held that certain waste products arising in the manufacturing process were not subject to the said rule.

4. The Tribunal, in considering the linked appeals, affirmed that garnet and gypsum were waste products emerging in the manufacturing process and not subject to Rule 6(3)(b) of CCR. It was clarified that these waste products were not final or byproducts, hence not attracting excise duty. Consequently, the appeal filed by the Revenue was dismissed, while the appeal by DCW was allowed with consequential relief, upholding the decision to set aside the demands related to garnet and gypsum.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, CHENNAI highlights the interpretation of Rule 6(3) of the Cenvat Credit Rules, 2002 regarding the recovery of 8% of the sale price of waste products, the determination of marketability and excisability of garnet and gypsum, and the application of the rule to waste products emerging in the manufacturing process.