2017 (12) TMI 85 - AT - Central Excise

CENVAT credit - waste and refuse - Rule 6 of the Cenvat Credit Rules - Held that - identical issue has been decided by the order of Tribunal in Shivratna Udyog Ltd. & Ors. 2017 (9) TMI 985 - CESTAT MUMBAI , where relying in the decision in the case of Rallies India Ltd. 2008 (12) TMI 46 - HIGH COURT BOMBAY it was held that in case of by product or waste cenvat credit cannot be denied - 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 generated during the manufacturing process.

Analysis:
The appeal involved the issue of whether the reversal of cenvat credit under Rule 6 of the Cenvat Credit Rules was necessary for waste and by-products generated during the manufacturing process. The appellant argued that as the products were waste and refuse of the manufacturing process, the cenvat credit reversal was not required, citing a Tribunal decision in a similar case. On the other hand, the respondent relied on an explanation inserted in Rule 6(1) to argue that the provisions applied even to non-excisable goods, attempting to distinguish a previous Supreme Court judgment.

The Tribunal noted that a similar issue had been decided in a previous order concerning bagasse, press-mud, boiler ash, and compost, which are waste or by-products. The Tribunal referred to various judgments, including one from the Bombay High Court, to establish that Rule 6(3) did not apply to waste generated during the manufacture of the final product. The Tribunal also highlighted a CBEC Circular stating that cenvat credit is admissible for inputs contained in waste, refuse, or by-products, emphasizing that if Rule 6(3) applied to such goods, this clarification would be redundant. Therefore, the Tribunal concluded that in the case of waste or by-products, Rule 6(3) had no application, setting aside the impugned orders and allowing the appeals based on the previous order's findings.

In conclusion, the Tribunal's judgment clarified that the reversal of cenvat credit under Rule 6 of the Cenvat Credit Rules was not required for waste or by-products generated during the manufacturing process. The decision was based on previous rulings and the understanding that cenvat credit should not be denied for inputs contained in waste, refuse, or by-products. The Tribunal's analysis emphasized the application of relevant legal provisions and established precedents to reach a decision favorable to the appellant.