2013 (3) TMI 258 - AT - Central Excise

Interpretation of Cenvat Credit Rule 6 on Iron Ore Fines: Not Subject to Excise Duty

The judgment focused on the interpretation of Rule 6 of the Cenvat Credit Rules, 2004 regarding duty payment on Iron Ore Fines. It determined that Iron ... Screening of Iron Ore - Manufacture - Non payment of excise duty on Iron Ore Fines as there is a separate tariff item No. under Chapter 26 of the Central Excise Tariff for it - assessee are engaged in the manufacture of Sponge Iron from the Iron Ore - Held that:- It is not disputed that the Iron Ore Fines emerge during the process of Iron Ore, as a waste material. They are nothing but smaller pieces of Iron Ore, which are not usable for further manufacture of Sponge Iron Ore. The same cannot be held to be a product having emerged as a result of manufacture. It is well settled law that the criteria of manufacture is required to be satisfied first for holding any product as excisable. See UNION OF INDIA Versus DELHI CLOTH & GENERAL MILLS CO. LTD.[1997 (5) TMI 49 - SUPREME COURT OF INDIA] & reiterated in UOI v. Parle Products Limited [1993 (1) TMI 100 - SUPREME COURT OF INDIA] Thus if no manufacturing activity has taken place, mere mention of the goods in the tariff will not make the said goods as excisable goods. It is not the Revenue’s case that by any artificial definition, the screening of Iron Ore has been held to be process of manufacture - in favour of assessee. Issues:1. Interpretation of Rule 6 of the Cenvat Credit Rules, 2004 regarding payment of duty on Iron Ore Fines.2. Determination of whether Iron Ore Fines qualify as a manufactured excisable product.3. Application of the criteria of manufacture for excisability.4. Assessment of the Commissioner (Appeals) decision and Revenue's appeal.Analysis:1. The primary issue in this case revolves around the interpretation of Rule 6 of the Cenvat Credit Rules, 2004 concerning the payment of duty on Iron Ore Fines cleared without payment. The Revenue contended that services used for both dutiable and exempted goods necessitate a payment of 10% of the price of Ore Fines. The proceedings were initiated based on this contention.2. The crux of the matter lies in determining whether Iron Ore Fines can be classified as a manufactured excisable product. The appellant argued that Iron Ore Fines are waste products emerging during the manufacturing process of Sponge Iron and do not qualify as a distinct commercial commodity. They cited various legal precedents to support their stance, emphasizing that no new product with different name, character, or use is created.3. The judgment extensively discusses the criteria of manufacture for excisability, emphasizing that a new commercial product must emerge to attract excise duty. The Commissioner (Appeals) analyzed the process of Iron Ore handling, grading, and screening, concluding that Iron Ore Fines are merely smaller pieces of the same material, unsuitable for further manufacturing. The ruling highlighted that the absence of a manufacturing activity precludes the classification of Iron Ore Fines as excisable goods.4. Upon assessing the Commissioner (Appeals) decision and the Revenue's appeal, the judgment upheld the former's order. It reiterated that the absence of a manufacturing process renders Iron Ore Fines ineligible for excise duty, emphasizing that the mere mention of goods in the tariff does not automatically classify them as excisable. The ruling rejected the Revenue's appeal, affirming the decision based on the criteria of manufacture and excisability.This comprehensive analysis of the legal judgment elucidates the intricate details of the case, focusing on the interpretation of rules, the classification of products, and the application of legal principles to determine excisability, ultimately resulting in the affirmation of the Commissioner (Appeals) decision.