Waste from raw material processing is not manufacture, so CENVAT Rule 6 does not apply to iron fines and coke breeze.

Waste or residue generated during screening and processing of raw materials, before use in manufacture, was treated as non-manufactured material with no use in the appellant's hands. The settled principle applied was that such waste does not satisfy the requirement of manufacture under Section 2(f) of the Central Excise Act, 1994, and therefore cannot be treated as excisable goods for invoking Rule 6 of the CENVAT Credit Rules, 2004. The deeming fiction under Section 2(d) was not extended beyond a process that itself amounts to manufacture. On that reasoning, Rule 6(3) was held inapplicable to iron fines and coke breeze, and the demand based on their clearance was unsustainable.

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Issues: Whether Rule 6(3) of the CENVAT Credit Rules, 2004 applies to iron fines and coke breeze generated as waste during screening and processing of raw materials before their use in manufacture.

Analysis: The disputed material arose before the raw materials were fed into the blast furnace and was found to be waste with no use in the appellant's hands. The settled principle applied was that waste or residue emerging from processing of raw material, when not the result of a manufacturing process, does not answer the requirement of manufacture under Section 2(f) of the Central Excise Act, 1994. Once the material is not the product of manufacture, it cannot be treated as excisable goods for the purpose of attracting Rule 6 of the CENVAT Credit Rules, 2004. The reasoning followed the Supreme Court's approach that the deeming fiction under Section 2(d) cannot be extended unless the underlying process itself falls within manufacture.

Conclusion: Rule 6(3) was held inapplicable to iron fines and coke breeze, and the demand founded on clearance of such waste products was unsustainable.

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