2019 (3) TMI 1174 - AT - Central Excise

Reversal of CENVAT Credit - exempt goods-by-product - granulated slag - common input/input services used for taxable as well as exempt goods - no separate inventory of input and input service has been maintained - Rule 6(3) of CENVAT Credit Rules, 2004 - Held that - This issue is no more res integra and has been settled in favour of the assessee in the case of M/S. MUKAND LTD VERSUS COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE, BELGAUM 2018 (11) TMI 12 - CESTAT BANGALORE , where it was held that It is well settled that slag arising in the course of manufacture of iron and steel is a waste and that the provisions of Rule 6 of CCR, 2004 are not attracted - demand do not sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
- Appeal against setting aside Order-in-Original and allowing the appeal of the assessee regarding duty on exempted goods.

Analysis:
The appeal before the Appellate Tribunal CESTAT Bangalore was directed against the Commissioner (A)'s order setting aside the Order-in-Original and allowing the appeal of the assessee. The case involved the manufacture of pig iron and steel bars by the respondents, who were availing credit of duty paid on input, capital goods, and input services. The issue arose when granulated slag and mini blast furnace (MBF) slag were generated during the manufacturing process. The assessee cleared granulated slag by paying duty but cleared MBF slag without discharging duty liability, claiming exemption under Notification No.4/2006-CE. The Revenue issued a show-cause notice proposing duty recovery on MBF slag. The original authority upheld the demand, but the Commissioner (A) set aside the order, leading to the appeal.

The Revenue argued that the impugned order was contrary to Board Circular No.904/24/2009/CX and highlighted the lack of separate records for MBF slag clearance. They contended that MBF slag was not a waste product and should attract duty under the Central Excise Tariff Act. On the other hand, the respondent-assessee relied on various decisions supporting their case, including judgments from the Supreme Court and different High Courts. They emphasized that the issue was settled in favor of the assessee by precedent decisions and a recent Tribunal ruling in a similar case.

After considering the submissions and reviewing the precedents, the Tribunal found that the issue was no longer res integra and had been settled in favor of the assessee by previous decisions. Citing the Tribunal's earlier decision in the case of Mukand Ltd., the Tribunal upheld the appeal of the assessee. The Tribunal emphasized that MBF slag was a waste product arising during the manufacture of dutiable final products, and the provisions of Rule 6 of CENVAT Credit Rules were not applicable in such cases. By following the established legal principles and precedents, the Tribunal concluded that there was no infirmity in the impugned order and dismissed the appeal of the Revenue, thereby upholding the decision of the Commissioner (A).

In conclusion, the Tribunal's detailed analysis and reliance on precedent decisions supported the assessee's position regarding the duty on exempted goods, ultimately leading to the dismissal of the Revenue's appeal and upholding the decision of the Commissioner (A).