Floor sweepings from biscuit manufacture are non-excisable waste, so Rule 6 reversal requirements do not apply.

Floor sweepings from biscuit manufacture, consisting of flour, dirty dough and similar waste, were treated as non-excisable rubbish rather than exempted goods, so Rule 6 of the Cenvat Credit Rules and Rule 57AD of the Central Excise Rules did not apply. Even if such waste were regarded as nil-rated excisable goods, the separate-account requirement could not be enforced where inputs were used only for dutiable final products and the waste arose incidentally, because compliance would be impossible. On that basis, the demand of 8% of the clearance value was held unsustainable and the Revenue's appeal failed.

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Issues: Whether floor sweepings arising during manufacture of biscuits were exempted goods so as to attract the requirement of reversal/payment under Rule 6 of the Cenvat Credit Rules and Rule 57AD of the Central Excise Rules.

Analysis: Floor sweepings consisting of flour, dirty dough and similar waste had already been treated by the Tribunal as rubbish or scum collected to keep the floor clean and not as residue from the food industry, and therefore as non-excisable. Once the product is non-excisable, it does not answer the definition of exempted goods, and the machinery of Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2001/2002 and Rule 57AD(2) of the Central Excise Rules, 1944 does not apply. Independently, even if the waste were treated as nil-rated excisable goods, the rule requiring separate accounts cannot be pressed into service where the manufacturer uses inputs only for dutiable final products and the exempted waste emerges incidentally, because compliance with such a requirement would be impossible; an impossible obligation is excused.

Conclusion: The demand of 8% of the clearance value was not sustainable, and the Revenue's appeal failed.

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