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Issues: Whether coke fines generated during manufacture of iron and steel products were to be treated as exempted final products attracting payment under Rule 6(3)(b) of the Cenvat Credit Rules, 2004, or as process waste/by-product not liable to such reversal or amount.
Analysis: Coke fines arose incidentally during the course of manufacture of the final steel products and were cleared under exemption. The dispute turned on whether such emergence made them an exempted final product. The Tribunal held that where inputs are contained in waste, refuse or by-product emerging in the course of manufacture, the mischief of Rule 6(3)(b) is not attracted. The distinction between a final product and a technological by-product/process waste was recognised, and the settled position that credit remains admissible when inputs are used in or in relation to manufacture, even if an intermediate or incidental product is exempt, was applied.
Conclusion: Coke fines were process waste or by-product and not an exempted final product for the purpose of Rule 6(3)(b); no amount at 10% or 5% of their value was payable. The appeal succeeded in favour of the assessee.
Ratio Decidendi: Exempted waste or by-product arising incidentally in manufacture does not attract Rule 6(3)(b) where the inputs are contained in such waste and the product is not a separately manufactured exempt final product.
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