2016 (8) TMI 892 - AT - Central Excise

Demand and imposition of penalty - cleared saw dust and wood waste/scrap arose during course of manufacture of final products without payment of Excise duty under Rule 6(3)(i) of Cenvat Credit Rules, 2004 - realized an amount during August 2010 to March 2011 by sale of saw dust - Held that - the issue is squarely covered in favour of the appellant by the various decisions relied upon by the appellant. In similar facts and circumstances of the case, I have already taken a decision in favour of the assessee in case of M/s MAS Furniture Vs. C.C.E., Mysore 2016 (8) TMI 753 - CESTAT BANGALORE . - Decided in favour of appellant with consequential relief

Summary

Issues:
- Applicability of Rule 6 of Cenvat Credit Rules, 2004 to waste products arising in the course of manufacturing dutiable final products

Analysis:
The appeal involved a dispute regarding the applicability of Rule 6 of the Cenvat Credit Rules, 2004 to waste products like saw dust and wood waste/scrap arising during the manufacturing process of dutiable final products. The appellants, manufacturers of Plywood, Flush doors, Veneers, availed Cenvat credit on inputs and consumables used in manufacturing. They cleared saw dust and wood waste/scrap without paying Excise duty, which was classified under Chapter heading No. 44013000 and chargeable to NIL rate of duty. A show-cause notice was issued, culminating in an Order-in-Original confirming the demand and imposing a penalty under Rule 15(A) of the Cenvat Credit Rules, 2004. The Commissioner (Appeals) upheld the Order-in-Original but reduced the penalty. The appellant contended that waste products are not final products, and Rule 6 does not apply to waste arising in the course of manufacturing dutiable final products.

The appellant's counsel argued that waste products like saw dust and wood waste/scrap are not manufactured goods and do not fall under Rule 6 of the Cenvat Credit Rules, 2004. He cited various case laws to support this argument, emphasizing that Rule 6 applies only when a manufacturer produces exempted and dutiable final products, not waste products. Referring to a C.B.E.C. Manual, the counsel highlighted that Cenvat credit is admissible for inputs contained in waste, refuse, or by-products. He also mentioned that a previous Circular had been quashed by the High Court as contrary to law. The counsel further pointed out that the issue had been decided in favor of the appellant in previous judgments by different judicial fora.

After reviewing the arguments and case laws cited, the Judicial Member noted that the issue was decisively in favor of the appellant based on the judgments and previous decisions. Citing a specific case where a decision was made in favor of the assessee in a similar matter, the Judicial Member allowed the appeal, setting aside the impugned order with any consequential relief. The decision was pronounced in open court on 23/08/2016.