2012 (7) TMI 476 - AT - Central Excise

Waiver of pre-deposit - Appellant is required to pay 8% or 10% of the amount of exempted products cleared by them from their factory premises, as per the provisions of Rule 6 of Cenvat Credit Rules, 2002/2004 Held that - Appellant cleared exempted product falling under Chapter 31 of Central Excise Tariff Act, 1985, at the nil rate of duty - appellant has taken cenvat credit on the inputs and used them for manufacturing bulk drugs and this product Penmycellium Meal has arisen as a waste during the process of manufacturing Decision in the case of Rallis India Limited (2008 (12) TMI 46 - BOMBAY HIGH COURT) followed. Appeal is allowed

Summary

Issues:
Waiver of pre-deposit of duty amount, applicability of Rule 6 of Cenvat Credit Rules, 2002/2004, clearance of exempted product Penmycellium Meal at nil rate of duty, cenvat credit on inputs used for manufacturing bulk drugs, relevance of judgment of Hon'ble High Court of Bombay in Rallis India Limited vs. UOI 2009 (233) ELT 301 (Bom.).

Waiver of Pre-Deposit of Duty Amount:
The application sought waiver of duty amount of Rs. 79,207/- along with interest and penalty. The adjudicating authority and the first appellate authority upheld the amounts due to the appellant's obligation to pay a percentage of exempted products cleared under Rule 6 of Cenvat Credit Rules, 2002/2004. The Tribunal, after hearing both sides, decided to dispose of the appeal without the pre-deposit condition, allowing the appeal for further proceedings.

Applicability of Rule 6 of Cenvat Credit Rules, 2002/2004:
The appellant cleared Penmycellium Meal, a waste material from bulk drug manufacturing, at nil duty rate under Chapter 31 of Central Excise Tariff Act, 1985. The appellant had availed cenvat credit on inputs used for bulk drug manufacturing, resulting in the production of Penmycellium Meal as a by-product. The Tribunal noted that the issue was settled by the judgment of the Hon'ble High Court of Bombay in Rallis India Limited vs. UOI 2009 (233) ELT 301 (Bom.), indicating that the matter was no longer res-integra. Consequently, the impugned order was set aside, and the appeal was allowed.

Clearance of Exempted Product Penmycellium Meal at Nil Rate of Duty:
The appellant's clearance of Penmycellium Meal, a waste material arising during bulk drug manufacturing, was done at nil duty rate. This fact was acknowledged by the first appellate authority. The Tribunal recognized that the appellant had appropriately utilized cenvat credit on inputs for bulk drug manufacturing, leading to the emergence of Penmycellium Meal as a by-product. The Tribunal's decision was influenced by the settled legal position established by the judgment in Rallis India Limited vs. UOI 2009 (233) ELT 301 (Bom.), which supported the appellant's position and led to the appeal being allowed.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Ahmedabad, showcases the issues surrounding the waiver of pre-deposit of duty amount, the application of Rule 6 of Cenvat Credit Rules, 2002/2004, the clearance of exempted product Penmycellium Meal at a nil rate of duty, and the relevance of the judgment of the Hon'ble High Court of Bombay in Rallis India Limited vs. UOI 2009 (233) ELT 301 (Bom.).