C.Ex duty on unused packing material

[deepak kalambate]

We are procuring Raw Materials/ Stores Spares/ Chemicals/Lub Oil etc on payment of duty & taking cenvat credit on inputs/ capital goods. We generally receive the above said material packed in Corrugated Boxes/ Separators, Plastic Cans/ Cones / Barrels  etc. Once the material packed in such material is consumed, the unused packing material is waste and therefore left for disposal, and we clear the same in local market without payment of duty.

Can department ask for exise duty on clearnce value of unused packing material?

AI Summary

Cenvat credit reversal not required for unused packing materials when credit taken; departmental guidance may require proportional reversal.
Disposition of unused packing materials for which Cenvat credit was availed generally attracts no duty and no reversal of credit per administrative guidance distinguishing such containers from process scrap; however, where items qualify as nil-rated or exempt outputs or are treated as manufacturing waste, Rule 6 CCR requires proportionate credit reversal or prescribed payment, producing divergent practices between revenue officers and trade.