2012 (10) TMI 230 - AT - Central Excise

Appellate Tribunal affirms ruling: Iron ore fines not subject to excise duty under Cenvat Credit Rules

CCE, Raipur Versus M/s Devi Iron & Power Ltd.

CCE, Raipur Versus M/s Devi Iron & Power Ltd. - 2013 (29) S.T.R. 172 (Tri. - Del.) , 2013 (287) E.L.T. 494 (Tri. - Del.) Issues:1. Whether input service credit is required to be paid for the production of iron ore fines.2. Whether iron ore fines should be considered as excisable goods attracting duty under Rule 6(3)(b) of the Cenvat Credit Rules.Analysis:Issue 1:The case involved a dispute regarding the payment of input service credit for the production of iron ore fines by the appellant. The Revenue contended that the input service credit should be paid to the extent of 10% as per Rule 6(3)(b) since the iron ore fines were being cleared without payment of duty. However, the Commissioner (Appeals) set aside the demand raised by the original adjudicating authority. The Commissioner relied on legal precedents, including the DCN case and other Supreme Court judgments, to determine whether the production of iron ore fines amounted to manufacturing for the purpose of excise duty. The Commissioner concluded that since the iron ore fines were not a different commercial product from the raw material used and were sold as waste, they did not attract excise duty. The Appellate Tribunal upheld the Commissioner's decision, stating that the iron ore fines were not exempted excisable goods and the input service was not used in the production of such waste, thus Rule 6(2) and 6(3)(b) were not applicable.Issue 2:The second issue revolved around whether iron ore fines should be considered as excisable goods attracting duty under Rule 6(3)(b) of the Cenvat Credit Rules. The Revenue argued that since the iron ore fines were manufactured excisable goods, they should be treated as the final product of the appellant, thus attracting the provisions of Rule 6(3)(b). However, the Appellate Tribunal referred to a previous judgment by the Hon'ble High Court in the case of Ralis India Ltd., which held that liability to pay under Rule 6 arises only for the final products and not for waste emerging during the manufacturing process. As the iron ore fines emerged as a waste product during the manufacture of the final product, the Tribunal agreed with the Commissioner (Appeals) that they did not fall under Rule 6(3)(b). Consequently, the Tribunal rejected the Revenue's appeal, upholding the decision of the Commissioner (Appeals).In conclusion, the Appellate Tribunal dismissed the Revenue's appeal, affirming the Commissioner (Appeals) decision that the production of iron ore fines did not attract excise duty under Rule 6(3)(b) of the Cenvat Credit Rules.