2017 (11) TMI 1766 - AT - Central Excise

CENVAT Credit - clearance of waste/by-products - Pressmud Bagasse and Compost Boiler Ash etc. - Rule 6 of the Cenvat Credit Rules - Held that - An identical issue has been decided by the order of Tribunal in Shivratna Udyog Ltd. & Ors. 2017 (9) TMI 985 - CESTAT MUMBAI where it was held that in case of removal of waste or by-product Rule 6(3) has no application - CENVAT credit need not be reversed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Reversal of cenvat credit under Rule 6 of the Cenvat Credit Rules for waste and by-products generated during the manufacturing process.

Detailed Analysis:
The appellants filed appeals seeking the reversal of cenvat credit under Rule 6 of the Cenvat Credit Rules for waste and by-products like Pressmud, Bagasse, Compost, and Boiler Ash cleared by them. The appellants argued that these products are waste and refuse generated during the manufacturing process of finished goods. They relied on a Tribunal decision that held reversal of cenvat credit is not required for waste and by-products generated during the manufacturing process.

The Assistant Commissioner relied on the impugned order, highlighting an explanation inserted in Rule 6(1) that applies the provisions even to non-excisable goods. The Assistant Commissioner sought to distinguish a decision of the Hon'ble Apex Court in a specific case.

Upon reviewing the submissions, the Member found that a similar issue had been decided in a previous Tribunal order dated 04.08.2017. The Tribunal order observed that waste and by-products like bagasse, press-mud, boiler ash, and compost do not require a 6% payment on clearance under Rule 6(3). The Member referenced various judgments, including one by the Hon'ble Bombay High Court, to support the decision that Rule 6 does not apply to waste generated during the manufacturing process. The Member also cited a CBEC Circular stating that cenvat credit is admissible for inputs contained in waste, refuse, or by-products.

Based on the analysis, the Member concluded that Rule 6(3) does not apply to the removal of waste or by-products. Therefore, the impugned orders were set aside, and the appeals were allowed. The decision was pronounced in court on 15.11.2017.