2016 (7) TMI 289 - AT - Central Excise

Cenvat Credit - Demand of reversal of credit on removal of waste - appellant was removing wastes of their cenvatable invoices like laminates, shipper carton, duplex, perform (water bottles) hydrogenated vegetable fats and wastes of their noodles without recording the same in the statutory records and on the strength of an invoice book and without discharging duty liability thereon. - Held that - appellant is not required to reverse the credit taken on the inputs contained in waste and scrap during the impugned period - Decided in favor of assessee.

Summary

Issues: Appeal against denial of credit on inputs in waste and scrap, interest, and penalty imposition.

Analysis:
1. The appellant appealed against the order denying credit on inputs contained in waste and scrap during the manufacture of final products, along with interest and penalty imposition. The appellant was engaged in the manufacture of misc. edible preparations and was removing waste without recording in statutory records or discharging duty liability, leading to a show cause notice.

2. The appellant's counsel argued that during the disputed period, Rule 57D of Central Excise allowed credit on inputs in waste and scrap. Referring to Circular No. B-4/7/2000-TRU, it was clarified that credit is admissible on inputs in waste, refuse, or by-product. The counsel also cited the Geltec Ltd. case decision supporting the appellant's position.

3. The respondent reiterated the findings of the impugned order, leading to a hearing where both sides presented their arguments.

4. The Tribunal examined Rule 57D, which states that credit shall not be denied on inputs in waste or by-products during the manufacture of final products. The CBEC's Circular further clarified that credit is admissible for inputs in waste or by-products used in manufacturing final products.

5. Referring to the Geltec Ltd. case, the Tribunal observed that the rule explicitly allows credit on inputs in waste or by-products. The Tribunal noted that subsequent Cenvat rules lacked similar provisions but upheld the applicability of Rule 57D during the relevant period.

6. The Tribunal concluded that the appellant was not required to reverse the credit on inputs in waste and scrap. The impugned order was set aside, and the appeal was allowed with any consequential relief.