Non-excisable waste is not an exempted final product; Rule 6(3)(b) cannot support demand on vermi compost.

Press mud arising in sugar manufacture was treated as waste and held to be non-excisable, so it did not qualify as an exempted final product for Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004. Because the rule applies only where common inputs are used in manufacturing final products, that requirement was not met where the material was merely waste later used to make vermi compost. The demand, penalty and interest were therefore not sustainable, and the duty demand was set aside.

---

---

Issues: Whether press mud, being a waste product and non-excisable, could be treated as a final product or exempted final product so as to attract Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004 and sustain the demand raised on vermi compost cleared by the assessee.

Analysis: Press mud was found to be a waste product arising in the manufacture of sugar and molasses. The Tribunal noted the settled position that press mud is non-excisable and does not qualify as an exempted final product for the purpose of Rule 6(3)(b). The demand under that rule depends on the existence of final products manufactured using common inputs, and that requirement was not satisfied where the product in question was only waste used to make bio-fertilizer.

Conclusion: Rule 6(3)(b) of the Cenvat Credit Rules, 2002/2004 was not applicable, and the demand, penalty, and interest were not sustainable.

Final Conclusion: The revenue's challenge failed, and the order setting aside the duty demand was upheld.

Ratio Decidendi: A waste product that is non-excisable does not amount to an exempted final product, and no demand can be raised under Rule 6(3)(b) merely because a further product is manufactured from such waste.

---