2022 (6) TMI 1177 - AT - Central Excise

CENVAT credit - empty packaging drums of cenvatable input - non excisable goods or not - requirement to pay an amount of 6% in terms of 6(3) of the Cenvat Credit Rules, 2004 - HELD THAT - On the identical issue this Tribunal in MS BANCO GASKETS I LTD VERSUS C.C.E. S.T. -VADODARA-II 2021 (8) TMI 77 - CESTAT AHMEDABAD has categorically held that empty packaging material of cenvatable input is not liable for payment either as excise duty or as cenvat credit under Rule 6(3) of Cenvat Credit Rules, 2004. The appellant is not liable to make any payment on clearance on empty drums - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Whether the appellant is required to pay 6% under Rule 6(3) of the Cenvat Credit Rules, 2004 on empty packaging drums of cenvatable input as non excisable goods.

Analysis:

Issue 1: Liability to pay 6% under Rule 6(3) of Cenvat Credit Rules, 2004
The appellant contended that the empty drums are not generated during the manufacturing process and are cleared after emptying the inputs, thus not liable for payment under Rule 6(3). The tribunal referred to a previous judgment in a similar case and analyzed the definitions of 'exempted goods' and 'final products' under Rule 2 of the Cenvat Credit Rules. It was concluded that since the packaging material did not arise from any manufacturing process, it did not fall under the definitions provided in the rules. The tribunal also cited a Supreme Court case and circulars issued by the Government of India supporting the non-levy of duty on such empty containers. The tribunal further referred to a judgment of the Allahabad High Court on a similar issue, emphasizing that in the absence of the material being a final product, the obligation of reversal of Cenvat Credit under Rule 6 was not applicable. Based on the detailed analysis and precedents, the tribunal held that the demand under Rule 6(3) was not sustainable, setting aside the impugned order and allowing the appeal.

Conclusion:
The tribunal ruled in favor of the appellant, stating that the appellant is not liable to make any payment on the clearance of empty drums, overturning the impugned order.

This comprehensive analysis of the judgment delves into the legal intricacies and precedents cited to arrive at a well-reasoned decision regarding the liability of the appellant under Rule 6(3) of the Cenvat Credit Rules, 2004 for empty packaging drums of cenvatable input.