2019 (3) TMI 29 - AT - Central Excise

Excisability - by-products - LD Slag and bi-Fuel Dust falling under Chapter Heading 2719 and Corex Sludge falling under Chapter Heading 2705 - Rule 6(1) or 6(2) of CCR, 2004 not followed - Held that - This issue is no more res integra and has been settled by various decisions of the High Courts and the Supreme Court as wherein it has been consistently held that even after the amendment from 01.03.2015, Rule 6 shall not applicable to by-products/waste products produced during the manufacture of dutiable final products - the impugned order is not sustainable in law - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Applicability of Rule 6 of CCR, 2004 to by-products and waste products during the manufacture of dutiable final products.

Analysis:
The appeal was directed against the order passed by the Commissioner (A) rejecting the appellant's appeal. The appellant, engaged in manufacturing Iron and Steel products, faced allegations of not following Rule 6(1) or 6(2) of CCR, 2004, leading to a demand for 6% of the value. The Original Authority confirmed the demand and imposed a penalty. The appellant contended that LD Slag, Corex Sludge, and other by-products were waste or non-excisable goods, citing various judicial precedents. The appellant argued that Rule 6 was inapplicable even after 01.03.2015, as waste products emerging during the manufacture of final products should not be subject to Rule 6. The appellant relied on multiple decisions supporting this argument.

The appellant further argued that no CENVAT credit should be taken on inputs used in the manufacture of exempted goods, challenging the applicability of CBEC Circular No. 1027/15/2016-CX. On the contrary, the Ld. AR contended that the by-products sold by the appellant were non-excisable goods under Rule 6(2) of CCR, 2004, and thus subject to the rule. The Ld. AR referred to a Board's Circular supporting this stance.

After hearing both parties and examining the records, the Tribunal found that the issue was settled by various High Court and Supreme Court decisions, indicating that Rule 6 does not apply to waste products during the manufacture of dutiable final products, even post the 01.03.2015 amendment. Consequently, the Tribunal held that the impugned order was unsustainable in law and allowed the appellant's appeal, setting aside the previous decision. The operative portion of the Order was pronounced in Open Court on 25/02/2019.