2019 (12) TMI 332 - AT - Central Excise

CENVAT Credit - waste/residue/by-product - manufacture of both dutiable final product as well as exempted goods namely, coke breeze/iron ore fine - non-maintence of separate records - requirement to pay 5%/10% on the value of clearance of such exempted goods - applicability of Rule 6(3) of the CENVAT Credit Rules, 2004 - HELD THAT - The issue of applicability of Rule 6(3) of CENVAT Credit Rules, 2004 byproducts/waste products which emerges during the process of manufacture of finished goods is no more res integra - The Hon'ble Supreme Court in UNION OF INDIA OTHERS VERSUS M/S. HINDUSTAN ZINC LTD. 2014 (5) TMI 253 - SUPREME COURT taking the meaning and the scope of the amended definition of excisable goods under Section 2(d) of the Central Excise Act, 1994 held that bagasse which emerges as the waste and residue as a result of the process carried out on the raw material cannot be considered to fall under the scope of definition of manufacture under Section 2(f) and accordingly, Rule 6 of CENVAT Credit Rules, 2004 shall not apply. No merit in the impugned order - appeal allowed - decided in favor of appellant.

Summary

Issues:
Applicability of Rule 6(3) of CENVAT Credit Rules, 2004 on waste products generated during the manufacturing process.

Analysis:
1. Facts of the Case: The appeal was filed against an Order-in-Original alleging that the appellant, engaged in manufacturing pig iron, generated waste products like iron fines and coke breeze before feeding raw materials into the blast furnace. The demand notice issued claimed duty payment on exempted goods, reducing the total demand after adjudication.

2. Appellant's Submission: The appellant argued that iron fines and coke breeze are waste products, not subject to Rule 6(3) of CENVAT Credit Rules, 2004. Cited judgments like Union of India Vs. Hindustan Zinc Ltd., Union of India Vs. DSCL Sugar, and Hindalco Industries Ltd. to support the contention.

3. Revenue's Stand: The Revenue supported the Commissioner's findings regarding the demand raised.

4. Court's Analysis: The Tribunal analyzed the applicability of Rule 6(3) based on precedents and amendments in the Central Excise Act. The judgment highlighted the definition of excisable goods and manufacture post-amendment, emphasizing the need for the process to fall within the definition of manufacture for Rule 6 to apply.

5. Legal Interpretation: The judgment clarified that waste products like bagasse, resulting from a process on raw material, do not fall under the definition of manufacture as per the amended Act. The Court emphasized that for excise duty to apply, the process must align with the definition of manufacture under the Act.

6. Decision: Relying on the legal principles established by the Supreme Court, the Tribunal found no merit in the impugned order. Consequently, the appeal was allowed, setting aside the previous order, and granting consequential relief, if applicable, as per the law.

7. Operative Portion: The final decision was pronounced in court, setting aside the impugned order and allowing the appeal with any consequential relief as per the law.