2017 (11) TMI 1460 - AT - Central Excise

CENVAT credit - waste, by-product, refuse generated during the process of manufacture - Rule 6 of CCR - Held that - identical issue has been decided by the order of Tribunal in Shivratna Udyog Ltd. & Ors. 2017 (9) TMI 985 - CESTAT MUMBAI , where In case of by product or waste the decision of Jurisdictional High Court of Bombay in the case of Rallies India Ltd. 2008 (12) TMI 46 - HIGH COURT BOMBAY settled the issue that in case of by product or waste cenvat credit cannot be denied - in case of removal of waste or by-product Rule 6(3) has no application - appeal allowed - decided in favor of appellant.

Summary

Issues:
Reversal of cenvat credit under Rule 6 of the Cenvat Credit Rules for waste and by-products.

Analysis:
The appellant argued for the reversal of cenvat credit under Rule 6 for waste products like Pressmud, Bagasse, and Compost, citing a Tribunal decision. The appellant relied on the case of Shivratna Udyog Ltd. & Ors., where it was held that such reversal is not required for waste generated during the manufacturing process.

The respondent, however, relied on the explanation inserted in Rule 6(1), arguing that it applies even to non-excisable goods, distinguishing the decision in DSCL Sugar Ltd. The Tribunal noted that the issue had been previously decided in the case of Shivratna Udyog Ltd. & Ors., where it was observed that waste and by-products like bagasse and press-mud do not require payment under Rule 6(3).

The Tribunal referred to various judgments, including Rallies India Ltd. Vs. Union of India, where it was held that Rule 57CC (similar to Rule 6) does not apply to waste generated during manufacturing. The Tribunal also cited the case of Union of India Vs. Hindustan Zinc Ltd., where it was established that the recovery of 8% for a by-product like Sulfuric Acid under Rule 6 was incorrect.

The Tribunal emphasized that according to CBEC Circular, cenvat credit is admissible for inputs in waste, refuse, or by-products, and if Rule 6(3) were to apply to such goods, this clarification would be redundant. Therefore, the Tribunal concluded that Rule 6(3) does not apply to waste or by-products, setting aside the impugned orders and allowing the appeals based on the aforementioned reasoning.

In conclusion, the Tribunal allowed the appeals based on the precedent set in the case of Shivratna Udyog Ltd. & Ors., holding that Rule 6(3) does not apply to waste or by-products, in line with the CBEC Circular's provisions regarding cenvat credit for inputs in waste, refuse, or by-products.