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2017 (12) TMI 146 - AT - Central ExciseCENVAT credit - waste - Rule 6 of the Cenvat Credit Rules - whether in terms of Rule 6(3) an amount of 6% is required to be paid on the clearance of such waste/by product? - Held that - if any input is contained in waste by product or goods the cenvat credit shall not be denied. If rule 6(3) is made applicable in these goods this clarification will stand redundant. If legislator has intention even to apply Rule 6(3) on waste or by-product, refuse then either this para should have been amended or omitted. Since this clarification is still in force the Cenvat credit either by way of Rule 6(3) or otherwise 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.
Issues:
Reversal of cenvat credit under Rule 6 of the Cenvat Credit Rules in respect of waste and by-products generated during the manufacturing process. Analysis: The appellants argued for the non-reversal of cenvat credit under Rule 6 for waste products like Pressmud and Bagasse. They relied on a Tribunal decision stating that such reversal is not required for waste generated during the manufacturing process. The respondent, on the other hand, referred to an explanation in Rule 6(1) to support the reversal of credit even for non-excisable goods. The respondent tried to distinguish a previous Supreme Court judgment in this regard. The judge reviewed the submissions and noted that a similar issue had been addressed in a previous Tribunal order. The judge referenced various judgments, including one by the Bombay High Court, to support the view that Rule 6 does not apply to waste or by-products. The judge emphasized that the clarification in the CBEC Circular allows cenvat credit for inputs contained in waste or by-products. The judge 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 cited precedents. The decision was pronounced in court on 27/10/17, and the appeals were allowed based on the reasoning provided in the judgment.
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