2025 (11) TMI 1334

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.... respective Orders-inAppeal passed by Commissioner of Central Excise (Appeals), Mangalore. 2. Briefly stated the facts of the case are that the appellant are engaged in the manufacture of paper and paper board falling under Chapter 48 of the Central Excise Tariff Act, 1985. The appellants are also availing and utilizing cenvat credit on inputs, capital goods, input services used in the manufacture of final products. On the basis of audit, it is alleged that the appellant were not maintaining separate account in respect of credit availed on the input services used in the manufacture of exempted goods and dutiable goods since they were clearing saw dust / wood waste falling under Chapter sub-heading 44013000 being exempted goods; also not ....

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....er he has submitted that Rule 6(3) is applicable only if the manufacturer is engaged in the manufacture of dutiable and exempted final products, since chipper dust is only a waste product arising during the course of manufacturer of paper and paper boards which are final products; therefore, it cannot be said that the appellant are engaged in the manufacture of chipper dust, hence Rule 6(3) of CCR, 2004 not applicable. 3.2. Further, referring to the Chapter 5 of the CBEC Supplementary Instructions, he has submitted that cenvat credit is admissible in respect of an amount of input contained in any waste refuse or by products even if it is subjected to 'nil' rate of duty. Similar principle is also applicable to intermediate product coming ....

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....w dust, the appellant from the very beginning claimed that since using of saw machines in the mills had been prohibited by the Forest Department, the cutting of wood in their factory premises had been carried out through chipping machines; therefore, what emerges is a waste product during chipping of woods or is called as chipper dust. It is the contention of the appellant that the final product is paper and paper boards; hence, emergence of waste product during the course of manufacture of the said dutiable final product cannot be a ground to demand an amount under Rule 6(3) of the Cenvat Credit Rules, 2004. 7. We find that the issue is no more res integra and settled by the judgment of the Hon'ble Supreme Court in a series of cases viz....

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....us metals or any such by-product or waste, which are non-excisable goods and are cleared for a consideration from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and input services, in terms of rule 6 of the CENVAT Credit Rules, 2004. This circular was issued in the background of judgment of the Hon'ble Supreme Court in the case of Union of India v. M/s. DSCL Sugar Ltd. [2015 (322) E.L.T. 769 (S.C.)] holding that Bagasse is only an agricultural waste and residue and it is not a result of any process which can be termed as 'manufacture'. Similar conclusion was also drawn by the Hon'ble High Court of Bombay in the case of M/s. Hindalco Industries Ltd. v. Union of India [2015 (315) E.L.T. 10 (B....