Manufacturing waste and Cenvat credit: demand under Rule 6(3)(i) was held unsustainable for slag cleared as refuse.

Slag arising unavoidably during manufacture was treated as waste or refuse, not as a separate exempt final product, and the applicable departmental instructions recognised that Cenvat credit remains admissible for inputs contained in waste, refuse or by-products. Applying the settled legal position, including the cited Supreme Court authority, the obligation to pay 10% of the value of such waste under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 was found not to arise where the clearance was of manufacturing waste. The demand was held unsustainable and the assessee succeeded.

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Issues: Whether slag arising unavoidably during manufacture and cleared without payment of duty attracts the demand under Rule 6(3)(i) of the Cenvat Credit Rules, 2004.

Analysis: Slag was treated as waste arising during manufacture of the final product. The applicable departmental instructions recognized that Cenvat credit is admissible in respect of inputs contained in waste, refuse or by-product. The settled legal position, including the cited Supreme Court authority, was applied to hold that the obligation to pay 10% of the value of such waste was not attracted where the clearance was of waste or refuse generated during manufacture.

Conclusion: The demand under Rule 6(3)(i) of the Cenvat Credit Rules, 2004 was held to be unsustainable and the appeal was allowed in favour of the assessee.

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