2013 (12) TMI 53 - AT - Central Excise

Duty liability under Rule 6(3) of the CENVAT Credit Rules, 2004 Common inputs in the manufacture of dutiable as well as exempted goods - Press-mud emerges as a waste in the process of manufacture of sugar and molasses Waiver of Pre-deposit Held that - Manufacture as defined under the Act pertains to any process leading to a manufactured product - It is undeniable that press-mud which was generated in the appellant s factory during the material period was not a manufactured product - the fundamental test of manufacture fails - press-mud cannot be considered to be an exempted excisable goods - t is also pertinent to note that this commodity does not figure anywhere in the 1st Schedule to the Central Excise Tariff Act - Rule 6(3) is not attracted and the demand is unsustainable Pre-deposits waived till the disposal Stay granted.

Summary

Issues:
- Interpretation of Rule 6(3) of the CENVAT Credit Rules, 2004 regarding demand on press-mud
- Determination of marketability and excisability of press-mud
- Analysis of the definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944

Interpretation of Rule 6(3) of the CENVAT Credit Rules, 2004 regarding demand on press-mud:
The case involved a dispute where the Department issued a show-cause notice demanding a percentage of the value of press-mud under Rule 6(3) of the CENVAT Credit Rules, 2004, claiming it as an 'exempted product' used alongside dutiable products. The original authority and the Commissioner (Appeals) upheld this demand, leading to the appeal. The Tribunal analyzed the demand in light of the relevant legal provisions and arguments presented by both sides.

Determination of marketability and excisability of press-mud:
The Tribunal delved into the concept of marketability as per the definition of "excisable goods" under the Central Excise Act, 1944. The Department argued that since the appellant sold press-mud for a consideration, it should be deemed marketable. However, the appellant contended that marketability alone does not determine excisability, emphasizing the requirement of the manufacturing process. The Tribunal agreed with the appellant, highlighting that press-mud, being a by-product of sugar and molasses manufacturing and not intentionally manufactured, did not meet the criteria of a 'manufactured product.' Consequently, press-mud could not be considered an 'exempted excisable goods.'

Analysis of the definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944:
The Tribunal scrutinized the definition of "manufacture" under Section 2(f) of the Act to ascertain whether press-mud qualified as a manufactured product. It concluded that press-mud, arising as a by-product during the manufacturing process, did not align with the definition of a manufactured product. As press-mud was not listed in the 1st Schedule to the Central Excise Tariff Act and failed the fundamental test of manufacture, the Tribunal ruled that Rule 6(3) was not applicable in this scenario. Consequently, the demand on press-mud was deemed unsustainable, leading to the grant of waiver of pre-deposit and stay of recovery as requested by the appellant.