Duty on waste and scrap clearances not sustainable where scrap arose from packing material, capital goods and grinding media use.

Clearance of waste and scrap arising from packing material, capital goods and grinding media used in cement manufacture was held not to attract duty in the manner demanded by Revenue. The dispute concerned PP wrapper, cable, PVC and grinding media scrap generated during manufacture and packing, and the applicable treatment under Rule 3(5) and Rule 3(5A) of the Cenvat Credit Rules, 2004. Relying on West Coast Industrial Gases Ltd. and Board Circular No. 721/37/2003-CX dated 06.06.2003, the Tribunal found such clearances not exigible as proposed. The Revenue's demand was therefore not sustainable and its appeal was dismissed.

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Issues: Whether duty was payable on the clearance of waste and scrap arising from packing material, capital goods, and grinding media, and whether the demand was sustainable under Rule 3(5) and Rule 3(5A) of the Cenvat Credit Rules, 2004.

Analysis: The dispute concerned clearance of scrap and waste generated in the course of manufacture and packing of cement, including PP wrapper, cable and PVC scrap, and grinding media scrap. The issue was covered by the Supreme Court decision in West Coast Industrial Gases Ltd. and the Board Circular No. 721/37/2003-CX dated 06.06.2003, on the basis of which such clearances were not exigible in the manner demanded by the Revenue.

Conclusion: The demand was not sustainable and the appeal filed by the Revenue was dismissed.

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