Sawdust not excisable under CENVAT rules. Appellant spared Rs.35,100 demand.

The Tribunal held that sawdust, as a byproduct of plywood manufacturing, did not qualify as a consciously manufactured product under excise laws. Marketability alone was insufficient for excisable goods classification. Therefore, the demand on the appellant under Rule 6(3)(b) of the CENVAT Credit Rules, 2004, amounting to Rs.35,100/- was deemed unsustainable, resulting in a waiver and stay on the adjudged dues.

---

---

Issues:
1. Whether sawdust can be considered an exempted product for the purpose of Rule 6(3)(b) of the CENVAT Credit Rules, 2004.
2. Whether the appellant was required to maintain separate accounts for dutiable and exempted products.
3. Whether sawdust qualifies as a manufactured product under the Central Excise Act.
4. Whether the demand raised on the appellant is sustainable.

Analysis:

1. The appellant, engaged in plywood manufacturing, sold sawdust without paying excise duty. The Department treated sawdust as an exempted final product due to the nil rate of duty during the disputed period. A demand was raised on the appellant under Rule 6(3)(b) of the CENVAT Credit Rules, 2004, amounting to Rs.35,100/-, confirmed by the original and appellate authorities, with a penalty imposed as well.

2. The appellant argued that sawdust, being a waste product, should not be considered exempted goods under Rule 6(3)(b). The Department contended that sawdust became excisable goods as per the 2008 amendment to the definition of "excisable goods," requiring separate accounts for dutiable and exempted products.

3. The 2008 amendment included an explanation deeming goods as marketable if capable of being bought and sold. While sawdust was deemed marketable, the question of it being a manufactured product was raised. The appellant, a plywood manufacturer, did not register for sawdust manufacture, indicating it was a byproduct. Marketability alone does not establish it as a manufactured product under excise laws.

4. The Tribunal found that sawdust, being a byproduct of plywood manufacturing, did not meet the criteria of being consciously manufactured. Marketability alone does not suffice for excisable goods classification. Consequently, the demand on the appellant was not sustainable, leading to a waiver and stay on the adjudged dues.

---