2017 (1) TMI 299 - AT - Central Excise

Waste/scrap - cleared without payment of duty - whether the appellant is required to reverse the amount of 10% of the value of products iron ore fine and coal fine cleared by them without payment of duty? - Held that - the issue is no more res integra and stand settled by the Tribunal decision in the case of CCE & ST Raipur vs. Aarti Sponge & Power Ltd. 2014 (11) TMI 1071 - CESTAT NEW DELHI It was considered that iron ore fine being a waste emerging during the process of crushing and screening of iron ores and cleared without payment of duty would not call for payment of 10% of the sale value of the product - reversal not sustained - appeal rejected - decided against Revenue.

Summary

Issues:
1. Reversal of 10% value for cleared goods without payment of duty under Rule 6 of Cenvat Credit Rules, 2004.

Analysis:
The case involved an appeal by the Revenue against an order passed by the Commissioner (Appeals) regarding the appellant, engaged in the manufacture of sponge iron, availing input service tax credit on transportation services for iron ore and coal used in their final product. The Revenue contended that waste products like iron ore fines and coal fines, cleared without duty payment, required a 10% reversal of the goods' value as per Rule 6 of the Cenvat Credit Rules, 2004. The original adjudicating authority confirmed a demand of &8377; 28,24,454/-, which was set aside by the Commissioner (Appeals), leading to the Revenue's present appeal.

The key issue before the tribunal was whether the appellant was obligated to reverse 10% of the value of waste products like iron ore fines and coal fines cleared without duty payment. The appellant argued that these waste goods were unintended byproducts of the manufacturing process and should not be considered exempted final products necessitating the 10% reversal under Rule 6. The tribunal referred to precedents, including the case of CCE & ST Raipur vs. Aarti Sponge & Power Ltd., where it was established that waste products emerging during manufacturing and cleared without duty payment did not require the 10% reversal. Another recent decision in the case of M/s. SKS Ispat and Power Ltd. supported this stance, setting aside the lower authorities' orders for reversal concerning iron ore fines. Additionally, the tribunal considered the Larger Bench decision in the case of Rallis India Ltd., which was later reversed by the Hon'ble Bombay High Court.

Ultimately, the tribunal found the issue to be settled based on previous decisions and rejected the Revenue's appeal, stating that there was no infirmity in the impugned order to warrant interference. The judgment highlighted the consistency in decisions regarding the treatment of waste products like iron ore fines and coal fines cleared without duty payment, emphasizing that such goods did not require the 10% reversal of their value as per Rule 6 of the Cenvat Credit Rules, 2004.