Tribunal Rules Waste Products Exempt from 10% Payment Under Cenvat Credit Rules

The Tribunal ruled in favor of the appellant, holding that waste products generated during the manufacturing process of Malt & Malt extract, such as chhilka, dundli, bhushi, and sprout, do not require the appellant to pay 10% of their value as per Rule 6(3) of the Cenvat Credit Rules, 2004. The decision was based on precedents set by the High Courts of Bombay and Allahabad, leading to the setting aside of the demand for payment of 10% of the value of exempted goods. The appeal was allowed with any consequential relief.

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Issues:
- Whether the appellant is liable to pay 10% of the value of exempted goods cleared by them under Rule 6(3) of the Cenvat Credit Rules, 2004.

Analysis:
The appellant, engaged in manufacturing Malt and Malt extract, availed Cenvat Credit on inputs, capital goods, and input services. The Revenue contended that since the appellant manufactured both dutiable and exempted final products, they must pay 10% of the value of exempted goods as per Rule 6(3) of the Cenvat Credit Rules, 2004. A show cause notice was adjudicated, confirming the demand along with interest and equivalent penalty. The appellant challenged this order.

The appellant's counsel relied on judgments of the Hon'ble High Court of Bombay and Allahabad in similar cases to argue that they are not liable to pay 10% of the value of waste generated during manufacturing. The Ld. Commissioner (Appeals) had also ceased proceedings against the appellant in a subsequent period. The Revenue reiterated the findings of the impugned order.

After hearing both parties, the Tribunal noted that the issue had been settled by the Hon'ble High Courts of Bombay and Allahabad in relevant cases. The Tribunal held that waste products like chhilka, dundli, bhushi, and sprout emerging during the manufacturing of Malt & Malt extract do not attract the requirement to pay 10% of their value. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

Therefore, the Tribunal's decision was in favor of the appellant, based on the settled legal position established by the High Courts, leading to the setting aside of the demand for payment of 10% of the value of exempted goods.

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