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of <h1>Tribunal Grants Relief: CENVAT Credit for By-Products Allowed</h1> The Tribunal granted relief to M/s. Narmada Gelatines Ltd. in their application for waiver of duty amount and penalty. The Tribunal held that credit ... Stay/Dispensation of pre-deposit Issues:Application for waiver of pre-deposit of duty amount and penalty under Rule 57AD of Central Excise Rules, 1944 or Rule 6 of Cenvat Credit Rules, 2002.Analysis:The case involved an application by M/s. Narmada Gelatines Ltd. for the waiver of duty amount and penalty. The applicants manufactured gelatin from crushed bones of animals and availed Modvat credit on duty paid for hydrochloric acid. The dispute arose as the Department demanded an amount equal to 8% of the price of Di-calcium Phosphate, considering the input used in both dutiable and exempted products without separate records. The applicant argued that Di-calcium Phosphate emerged as a by-product in the gelatin manufacturing process, and no modvatable inputs were used in its production. The Tribunal referred to a previous judgment and held that credit cannot be denied based on the emergence of a by-product.On the opposing side, it was argued that under Cenvat Credit Rules, there was no provision similar to Rule 57D of Central Excise Rules, which protected credits for inputs in waste or by-products. The Department contended that Di-calcium Phosphate, being exempted from duty, required compliance with Rule 6(2) of Cenvat Credit Rules. It was asserted that the applicants should pay 8% of the price of exempted goods.The Tribunal analyzed the submissions and referred to Rule 6(1) of Cenvat Credit Rules, which restricts credit on inputs used in the manufacture of exempted goods. It was noted that the hydrochloric acid was used to manufacture gelatin, not Di-calcium Phosphate directly. The Tribunal found that the inputs were not used in the manufacture of final products subject to duty and exempted products simultaneously. Referring to a circular by the Central Board of Excise & Customs, the Tribunal held that CENVAT credit is admissible for waste, refuse, or by-products. Consequently, the Tribunal stayed the recovery of the duty and penalty during the appeal's pendency, recognizing a strong prima facie case in favor of the applicants. The matter was scheduled for regular hearing on a specified date.
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