2018 (2) TMI 912 - AT - Central Excise

CENVAT credit - manufacture of dutiable and exempted finished goods - non-maintenance of separate records - Rule 6(3) of Cenvat Credit Rules 2004 - Held that - the Slag which is a waste product arises during the manufacturing of MS Billets and the same is also exempted by virtue of N/N. 12/2012 dated 17.03.2012 - Slag is a waste product and is not excisable. The provisions of Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004 are not applicable to this case as the Slag emerges as inevitable waste and therefore, the manufacturer is not required to maintain separate account with regard to the Slag - appeal allowed - decided in favor of appellant

Summary

Issues:
- Whether the appellant is liable to pay excise duty on the product Slag arising during the manufacture of MS Billets?
- Whether the provisions of Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004 are applicable in this case?
- Whether the impugned order passed by the Commissioner is sustainable in law?

Analysis:
- The appeal was against the order allowing the Department's appeal and setting aside the Order-in-Original due to the appellant's failure to maintain separate accounts for dutiable and exempted goods during the manufacture of MS Billets, leading to a demand for payment under Rule 6(3) of Cenvat Credit Rules, 2004.
- The appellant argued that the Slag arising during manufacturing is exempted under Notification No. 12/2012-CE and is not excisable, citing relevant case laws supporting their position.
- The Department contended that the impugned order was valid, supporting the findings against the appellant.
- The Tribunal found that the Slag was exempted waste arising during manufacturing, not excisable, and not subject to Rule 6(2) or Rule 6(3) of the Cenvat Credit Rules, 2004, as supported by previous decisions. The impugned order was deemed unsustainable in law and set aside in favor of the appellant.