2016 (12) TMI 1214 - AT - Central Excise

Demand u/r 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944 - manufacture of pig iron falling under Chapter 72 - in the course of manufacture of the pig iron, bolder slag comes into existence at the bottom of the furnace which is not liable to excise duty. That first appellate authority in para 5 of Order-in-Appeal dated 5/12/2012 has held that amount with respect to exempted goods (boulder slag) is payable under Rule 6 of the CENVAT Credit Rules, 2004. It is the case of the appellant that the raw material on which the CENVAT Credit is used are not for the manufacture of boulder slag and no amount under Rule 6 of the CENVAT Credit Rules, 2004 is payable. Held that - Appellant is the manufacturer of pig iron and is taking CENVAT Credit on the raw materials used for the manufacture of pig iron. All the inputs utilised in the manufacture of pig iron and boulder slag is only waste in the manufacture of pig iron. The CENVAT Credit is, therefore, not taken specifically for the manufacture of boulder slag. It has been held by the Court that wastes like sugarcane coming into existence in the manufacture of sugar cannot be held to be excisable for the purpose of payment of amounts under Rule 6 of the CENVAT Credit Rules. Accordingly, appeal filed by the Appellant is allowed by setting aside Order-in-Appeal dated 5/12/2012 by holding that the materials are not used in the manufacture of exempted boulder slag but are only used in the manufacture of pig iron - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944.
2. Classification of boulder slag under Central Excise Tariff Heading 2690.
3. Applicability of Rule 6 of the CENVAT Credit Rules, 2004.
4. Whether boulder slag is excisable and liable for payment under Rule 6.

Analysis:

1. The appellant contested a demand of &8377; 77,483 under Rule 14 of CENVAT Credit Rules, 2004, arguing they are manufacturers of pig iron and boulder slag, a by-product, is not excisable. The appellant relied on a case law to support their argument.

2. The Revenue contended that boulder slag is classifiable under Central Excise Tariff Heading 2690 and is exempted under a specific notification. The argument was that as boulder slag is excisable, the appellant is obligated to pay under Rule 6 of the CENVAT Credit Rules, 2004.

3. The Tribunal examined the case records and found that the appellant takes CENVAT Credit on raw materials for pig iron manufacturing, with boulder slag being a waste product in this process. The Tribunal cited a precedent where waste products like sugarcane in sugar manufacturing were not considered excisable for payment under Rule 6.

4. Consequently, the Tribunal allowed the appeal, setting aside the Order-in-Appeal, by ruling that the materials used were not for the production of exempted boulder slag but for pig iron manufacturing. The Tribunal held that the appellant was not liable to pay under Rule 6 as the materials were not specifically used for boulder slag production.

5. The appeal by the appellant was allowed, with the Tribunal pronouncing the operative part of the order in court, thereby resolving the dispute in favor of the appellant.

This comprehensive analysis covers the interpretation of relevant rules, classification of goods, and the determination of excisability and liability under the CENVAT Credit Rules, providing a detailed overview of the judgment's key points.