2016 (12) TMI 588

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....missioner of Central Excise & Customs (Appeals), Noida.  2.  The issue in this appeal is whether the appellant Paam Eatables Ltd (PEL for short) a manufacturer of Maggi 2 minute Noodles etc on job work basis, and cleared on payment of duty, whether are liable to reverse input credit under Rule 57CC of Central Excise Rules, 1944 read with rule 6 (1) of the CENVAT Credit Rules, 2004, for removal of broken noodles (waste product) exempt under Notification No. 3/2005-CE. 3.  The brief facts of the case are that the appellant Paam Eatables Ltd is a manufacturer of noodles and also manufactures noodles for Nestle India Ltd on job work basis in respect of Maggi 2 Minute Noodles, cleared on payment of appropriate duty. The appe....

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....hich are waste product to the manufacturer PEL and as such under the provisions of rule 57CC of the CER, 1944 they are not required to reverse the CENVAT credit. SCN was adjudicated vide O-I-O dated 29.09.06 confirming the said demand of Rs. 1,39,568/- on PEL and further penalty was imposed on them under Rule 173Q of CER, 1944 read with Rule 25 of CCR, 2002 under section 11AC, along with interest. 4.  Further, penalty of equal amount was imposed on other appellant-Nestle India Ltd under Rule 209A read with Rule 26 of CER, 1944. Being aggrieved the appellant preferred appeal before the Commissioner (Appeals) who passed the impugned order and rejected the appeals. Observing that waste product is exempted goods and accordingly Rule 57 ....

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....interpreted in the context of the said rule, which uses the other expression "waste" or "refuse" etc. It is in that scenario that the rule provides for non-reversal of modvat credit, even if waste, refuse or by product has emerged during the course of manufacture. The effect of the said rule would be that if waste product, which may not be excisable, e.g. floor sweepings during the course of manufacture of biscuits, then the quantum of credit originally taken is not to be varied. Similarly, if iron and steel scrap arises during manufacture of iron products, the modvat is not to be varied, but iron and scrap being excisable product, has to discharge duty burden. If the same is exempted, provisions of Rule 57CC will apply. As such, it has to ....

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....sed is unambiguous. As already observed, the provisions of Rule 57CC or Rule 6 envisage common use of inputs in two final products i.e. one dutiable and other exempted, for the applicability of the same. As such, we are of the view that as long as two final products emerging out of use of common inputs are excisable and one of them is exempted, the provisions of Rule 57CC will apply. The exempted final product may be intended manufacture or unintended by-product. As such, we agree with the view expressed in Binani Zinc Ltd. [2005 (187) E.L.T. 390 (Tri.)]. Reference is answered in above terms. File is sent back to the regular bench for disposal of appeal." The Hon'ble High Court taking notice of the provisions observed that the Larger Ben....