2007 (8) TMI 135 - AT - Central Excise

Revenue Appeal Dismissed Over Excise Demand on Waste Products: Marketability Criteria Clarified

The appeal was filed by the Revenue challenging the demand for 8% of the sale price of waste products garnet and gypsum under Rule 6(3) of the Cenvat ... Refund – The appellant manufactured certain dutiable goods and transferred them to their sister unit and paid duty on the transaction value at factory gate but duty ought to valued as per Rule 8 of the Valuation Rules, 2000 and claim for the excess pay – Allowed refund claim of appellant Issues:1. Interpretation of Rule 6(3) of the Cenvat Credit Rules, 2002 regarding the recovery of 8% of the sale price of waste products.2. Determination of whether waste products such as garnet and gypsum are marketable and excisable under Rule 6(3)(b) of CCR.3. Application of excise law in cases where exempted byproducts emerge in the course of manufacturing final products using common inputs.Analysis:1. The appeal was filed by the Revenue against the impugned order setting aside two orders of the original authority demanding 8% of the sale price of gypsum and garnet, waste products arising in the manufacture of salt and Ilmenite. The Commissioner found that garnet and gypsum were waste products similar to press mud, which was deemed not excisable. Relying on a Circular of the Board, it was concluded that garnet and gypsum were not marketable and therefore not excisable, leading to the vacation of the original authority's orders.2. The ld. SDR contended that even though garnet and gypsum were waste products, they were marketable and thus subject to Rule 6(3)(b) of CCR. The argument was that the impugned order should be set aside based on this interpretation. However, the ld. Counsel for the respondents argued that waste products emerging in the manufacturing process of final products using common inputs did not require payment under Rule 6(3)(b) of CCR. Reference was made to a Tribunal decision where it was held that if exempted byproducts manufactured using common inputs were removed, Rule 6(3)(b) did not apply.3. The judgment addressed another appeal related to the confirmation of the original authority's order directing payment for garnet and gypsum. It was established that these waste products were not final or byproducts and did not fall under Rule 6(3)(b) of CCR. The appeals were linked due to the common issue, and it was concluded that the waste products did not attract the provisions of the rule. Consequently, the Revenue's appeal was dismissed, and the appeal filed by DCW was allowed with consequential relief.In summary, the judgment clarified the application of Rule 6(3) of the Cenvat Credit Rules, 2002 concerning the recovery of sale price for waste products in the manufacturing process. It emphasized the marketability and excisability of waste products like garnet and gypsum, ultimately deciding that they did not fall under the purview of the rule. The decision was based on the interpretation of excise law and previous tribunal rulings, providing a comprehensive analysis of the issues involved.