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2017 (9) TMI 985 - AT - Central ExciseCENVAT credit - By-product - Bagasse, Press-mud, Boiler Ash and Compost - Rule 6(3) of CCR - case of the department is that since no duty has been paid on these by-products in terms of Rule 6(3) they are required to pay 6% of the sale value of these by-proudcts - Held that - all the goods which are cleared without payment of amount under Rule 6(3) are either by product or waste - In case of by product or waste the decision of Jurisdictional High Court of Bombay in the case of Rallies India Ltd. 2008 (12) TMI 46 - HIGH COURT BOMBAY settled the issue that in case of by product or waste cenvat credit cannot be denied - in case of removal of waste or by-product Rule 6(3) has no application - appeal allowed - decided in favor of appellant.
Issues:
Whether Rule 6(3) applies to the clearance of waste or by-products generated during the manufacture of excisable goods, requiring payment of 6% of the sale value of such by-products. Analysis: The appellant, engaged in manufacturing sugar and molasses, clears waste by-products like Bagasse, Press-mud, Boiler Ash, and Compost without excise duty payment. The department insists on a 6% payment under Rule 6(3) for these by-products. The appellant argues that these waste products arise unavoidably during manufacturing, and cenvat credit cannot be denied for inputs used in manufacturing excisable goods. The appellant cites various judgments to support their position. The Revenue contends that post-amendment under Rule 6(1), exempted goods now include non-excisable goods, making Rule 6(3) applicable to waste by-products. They refer to specific judgments to strengthen their argument. The Tribunal examines the case, considering precedents like Rallies India Ltd. and Union of India Vs. Hindustan Zinc Ltd. The Tribunal notes that for waste arising during manufacturing, Rule 6(3) does not apply, as clarified in the CBEC Circular. The Tribunal emphasizes that cenvat credit is admissible for inputs in waste or by-products. Therefore, the Tribunal rules that Rule 6(3) does not apply to waste or by-products, setting aside the impugned orders and allowing the appeals.
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