2022 (11) TMI 919 - AT - Central Excise

CENVAT Credit - waste - exempt goods or not - zinc dross, zinc dust and flux skimming - applicability of Rule 6 of CCR - HELD THAT - Both the authorities below while upholding the demand raised, have relied upon the amendment made in Rule 6 ibid with effect from 1.3.2015 and came to the conclusion that after the aforesaid amendment w.e.f. 1.3.2015 zinc dross/flux/skimmings cleared by the appellant are covered by the provisions of Rule 6 ibid. The issue involved herein is no more res integra in view of the decision of the co-ordinate Bench (Chennai Bench) of the Tribunal in Appellant s own case M/S. APL APOLLO TUBES LTD. (UNIT-II) VERSUS COMMISSIONER OF GST CENTRAL EXCISE 2019 (7) TMI 733 - CESTAT CHENNAI in which the Tribunal while dealing with the aforesaid amendment in Rule 6 ibid allowed the Appeal filed by the appellant and held that when the zinc scrap, a waste arising out of process of manufacture of finished goods, is not the goods manufactured by the appellant, the same cannot be considered as exempted goods manufactured by them - In yet another case similar view has been taken by the Bangalore Bench of the Tribunal in SHRI LAKSHMI METAL UDYOG LTD VERSUS COMMISSIONER OF CENTRAL TAX, BANGALURU SOUTH COMMISSIONERATE 2019 (8) TMI 420 - CESTAT BANGALORE . In view of the series of decisions of different Benches of the Tribunal deciding the issue in favour of the assessee, even after considering the amendment made in Rule 6 ibid, the impugned order is accordingly set aside - appeal allowed.

Summary

Issues:
Challenging common order by Commissioner (Appeal) rejecting appeals regarding liability for waste/residue generated during manufacturing process.

Analysis:
1. The appellant, engaged in manufacturing pipes, generated unusable waste/residue like zinc dross, zinc dust, and flux skimming during the manufacturing process, which was sold in the open market. The department considered the waste/residue as exempted goods, invoking Rule 6(3) of Cenvat Credit Rules, 2004, leading to two show cause notices for substantial amounts.

2. The appellant argued that the waste/residue generated was not zinc scrap, emphasizing that the issue had been previously decided in their favor by the Chennai Bench of the Tribunal. The department, however, supported the findings of the impugned order upholding the demand.

3. The Tribunal, after considering the submissions and relevant case laws, pointed out that the issue was no longer res integra due to a decision in the appellant's own case by the Chennai Bench. The Tribunal held that waste arising from the manufacturing process, like zinc scrap, which was not consciously manufactured by the appellant, cannot be considered as exempted goods manufactured by them.

4. The Tribunal referred to similar decisions in the appellant's favor by other benches, such as the Allahabad and Bangalore Benches, which also relied on the Chennai Bench's decision. The consistent rulings in favor of the assessee, despite the amendment in Rule 6, led the Tribunal to set aside the impugned order and allowed the appeals with consequential relief, if any, as per law.

5. The Tribunal's comprehensive analysis and reliance on precedents established a clear legal position that waste products arising during the manufacturing process and sold for consideration are not subject to Rule 6 of the Cenvat Credit Rules, even after the amendment. The series of decisions across different benches supported the appellant's position, resulting in the allowance of the appeals and setting aside of the demand orders.