2016 (12) TMI 1214 - AT - Central Excise

Tribunal rules waste product not excisable under Rule 6, setting aside Order-in-Appeal

The Tribunal allowed the appellant's appeal, setting aside the Order-in-Appeal, ruling that the appellant was not liable to pay under Rule 6 as the ... CENVAT credit reversal under Rule 6 of the CENVAT Credit Rules, 2004 - liability to pay under Rule 14 read with Section 11A of the Central Excise Act, 1944 - excisability of boulder/blast furnace slag - attribution of inputs to manufacture of exempted goods versus main product - waste generated in manufacture not separately excisable for CENVAT reversalCENVAT credit reversal under Rule 6 of the CENVAT Credit Rules, 2004 - excisability of boulder/blast furnace slag - attribution of inputs to manufacture of exempted goods versus main product - waste generated in manufacture not separately excisable for CENVAT reversal - Whether appellant was liable to pay amount under Rule 6 of the CENVAT Credit Rules, 2004 in respect of boulder slag arising in the manufacture of pig iron - HELD THAT: - The Tribunal found that the appellant used inputs and took CENVAT credit for manufacture of pig iron and that boulder slag (blast furnace slag) arises only as waste at the bottom of the furnace in the course of pig iron production. The materials on which CENVAT credit was taken were not specifically used for the manufacture of boulder slag but were employed for producing pig iron. The Tribunal applied the established principle that waste incidental to manufacture (analogous to sugarcane waste in sugar manufacture) cannot be treated as a separately manufactured exempted product for the purpose of invoking Rule 6 reversal. On that basis the appellate authority's conclusion that Rule 6 applied to require payment in respect of boulder slag was set aside. [Paras 4, 5]Appellant is not liable to pay the amount under Rule 6 in respect of boulder slag; Order in Appeal dated 5/12/2012 is set aside and the appeal is allowed.Final Conclusion: Appeal allowed; Order in Appeal dated 5/12/2012 upholding the Order in Original is set aside on the ground that boulder slag is incidental waste and the inputs credited were not used for its manufacture, hence no reversal under Rule 6 is payable. Issues:1. Interpretation of Rule 14 of CENVAT Credit Rules, 2004 read with Section 11A of the Central Excise Act, 1944.2. Classification of boulder slag under Central Excise Tariff Heading 2690.3. Applicability of Rule 6 of the CENVAT Credit Rules, 2004.4. Whether boulder slag is excisable and liable for payment under Rule 6.Analysis:1. The appellant contested a demand of &8377; 77,483 under Rule 14 of CENVAT Credit Rules, 2004, arguing they are manufacturers of pig iron and boulder slag, a by-product, is not excisable. The appellant relied on a case law to support their argument.2. The Revenue contended that boulder slag is classifiable under Central Excise Tariff Heading 2690 and is exempted under a specific notification. The argument was that as boulder slag is excisable, the appellant is obligated to pay under Rule 6 of the CENVAT Credit Rules, 2004.3. The Tribunal examined the case records and found that the appellant takes CENVAT Credit on raw materials for pig iron manufacturing, with boulder slag being a waste product in this process. The Tribunal cited a precedent where waste products like sugarcane in sugar manufacturing were not considered excisable for payment under Rule 6.4. Consequently, the Tribunal allowed the appeal, setting aside the Order-in-Appeal, by ruling that the materials used were not for the production of exempted boulder slag but for pig iron manufacturing. The Tribunal held that the appellant was not liable to pay under Rule 6 as the materials were not specifically used for boulder slag production.5. The appeal by the appellant was allowed, with the Tribunal pronouncing the operative part of the order in court, thereby resolving the dispute in favor of the appellant.This comprehensive analysis covers the interpretation of relevant rules, classification of goods, and the determination of excisability and liability under the CENVAT Credit Rules, providing a detailed overview of the judgment's key points.