Appeals allowed as slag waste not subject to Rule 6. Precedents cited. Orders demanding payment set aside.

The appeals were allowed as the slag generated as waste during the manufacture of steel was deemed not to attract Rule 6 of CENVAT Credit Rules. The Judicial Member concluded that the slag is a waste product arising during the production of dutiable final products and does not fall under Rule 6. Previous tribunal decisions and court cases were cited to support this stance, leading to the setting aside of the previous orders demanding payment equal to 6% of the value of the slag.

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Issues:
Whether slag generated as waste product in the course of manufacture of alloy and non-alloy steel as dutiable final product attracts the provisions of Rule 6 of CENVAT Credit Rules (CCR), 2004 requiring payment of an amount equal to 6% of the value of the said waste product.

Analysis:
The appellants filed three appeals against the Commissioner (A)'s order rejecting their appeal, all concerning the issue of whether slag generated as waste during the manufacture of steel attracts Rule 6 of CENVAT Credit Rules. The appeals were disposed of collectively due to the identical nature of the issue. The details of the appeals, including period, order, amount of 6% value of slag, and penalty, were presented. The appellants, manufacturers of alloy and non-alloy steel, faced demands for payment equal to 6% of the value of slag arising as waste during the manufacturing process. The Assistant Commissioner accepted the legal position for a specific period but demanded payment for subsequent months citing a notification.

The counsel for the appellant argued that Rule 6 should not apply as the slag is a waste product arising during the manufacture of dutiable final products. He emphasized that even after the insertion of Explanation 1 to Rule 6(1) of CCR in 2015, the slag should not be considered a final product. The appellant cited previous tribunal decisions and court cases supporting their stance that waste products like slag do not fall under Rule 6 of CCR. The learned AR defended the impugned order.

Upon considering the arguments and precedents, the Judicial Member found that the slag is indeed a waste product emerging during the manufacture of dutiable final products. Referring to a Division Bench decision in the appellant's previous case and other relevant cases, it was concluded that Rule 6 does not apply to waste or by-products arising in the course of manufacturing dutiable goods. The Division Bench's findings from the previous case were cited to support the decision. Consequently, the impugned orders were deemed unsustainable in law, and the appeals of the appellant were allowed, setting aside the previous orders.

The judgment was pronounced in open court on 23/10/2018.

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