Residue from manufacture is not an exempted good under Cenvat Credit Rules; Rule 6 demand fails without independent manufacture.

Barley husk arising inevitably during manufacture of malt-based food products was treated as residue or waste, not as an independently manufactured exempted good. Applying DSCL Sugar, the text states that the deeming fiction in Section 2(d) of the Central Excise Act does not apply unless the item is first shown to be manufactured under Section 2(f); mere marketability or tariff classification is insufficient. On that basis, Rule 6(3) of the Cenvat Credit Rules was held inapplicable, and the demand was unsustainable.

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Issues: Whether barley husk, arising inevitably during manufacture of malt-based food products, was a manufactured exempted good so as to attract demand under Rule 6(3) of the Cenvat Credit Rules, 2004.

Analysis: Barley husk was found to be a residue or waste emerging in the course of manufacture of the principal dutiable products, without any separate manufacturing activity or intention to produce that material. The governing legal position, as applied from the Supreme Court ruling in DSCL Sugar and followed by subsequent Tribunal decisions, is that the deeming fiction in Section 2(d) of the Central Excise Act, 1944 cannot operate unless the article is first shown to be manufactured within the meaning of Section 2(f) of the Central Excise Act, 1944. Mere marketability or tariff classification does not by itself establish excisability, and Rule 6 is inapplicable where the item is not manufactured excisable goods.

Conclusion: The demand raised under Rule 6(3) of the Cenvat Credit Rules, 2004 was held unsustainable, and the assessee succeeded.

Ratio Decidendi: A residue or by-product that emerges inevitably in the course of manufacture, without independent manufacture, cannot be treated as an exempted manufactured good for the purpose of Rule 6 of the Cenvat Credit Rules, 2004.

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