Crushing and screening residue is not separate manufacture, so Rule 6 liability for iron ore fines fails.

Iron ore fines generated merely as an inevitable by-product of crushing and screening iron ore for sponge iron production were treated as the same material in altered form, not as independently manufactured goods. Because the fines were not shown to have separate excisable character or distinct exempted status, the conditions for liability under Rule 6 of the Cenvat Credit Rules, 2004 were not met. The demand was therefore held unsustainable in favour of the assessee.

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Issues: Whether iron ore fines emerging during crushing and screening of iron ore for manufacture of sponge iron are a separate excisable and exempted commodity, and whether the assessee was liable to pay an amount under Rule 6 of the Cenvat Credit Rules, 2004.

Analysis: The generation of iron ore fines arose only as an inevitable incident of crushing and screening the input iron ore for use in the sponge iron plant. The process merely changed the form or size of the same material and did not amount to manufacture. The fines were not shown to be independently manufactured goods, nor was any notification shown to exempt them as a distinct product. In the absence of excisable character and exempted status, the consequences under Rule 6 of the Cenvat Credit Rules, 2004 could not be attracted.

Conclusion: The iron ore fines were not a separate excisable or exempted commodity, and the demand under Rule 6 was unsustainable; the finding is in favour of the assessee.

Ratio Decidendi: A residue or finer fraction generated merely by crushing and screening of input material, without any independent manufacturing process, does not constitute manufacture or separate excisable goods for the purpose of Rule 6 liability.

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