TaxTMI 
TaxTMI 
2026 (7) TMI 150
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....the orders of the Assistant Commissioner and rejecting the appellant's appeals. 2. I have heard learned counsel for the appellant and the learned authorised representative for the Revenue and perused the records. The following two short issues are involved in these three appeals: Excise Appeal No. 50001 of 2026 (a) Demand of an amount of 7% of the job work charges which the appellant had received for manufacturing goods for Pro-tech Enterprises (the principal) under Rule 6(3)(i) of the CENVAT Credit Rules, 2004 [CCR] The appellant had manufactured the goods for the principal as a job worker and the goods were cleared without payment of duty under Notification No. 214/86-CE which allowed duty free clearance if the princi....
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....er Rule 6(3) (i) cannot be sustained. Submissions on behalf of the Revenue 6. Learned authorised representative for the Revenue vehemently supported the impugned order and asserted that it calls for no interference. As far as the first issue, is concerned, he asserted that the appellant had rendered a service to M/s. Protech and received a consideration for the service. Undisputedly, no service tax was paid on this service as it was not taxable. 7. The CCR enable an assessee (whether manufacturer or service provider) to avail credit of excise duty paid on inputs and service tax paid on input services which are used in or in relation to the manufacture of excisable goods or providing taxable services. In order to avail CENVAT credit....
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....ions advanced by both sides and perused the records. 12. As far as the manufacture of the goods on job work basis is concerned, undisputedly, the department considered it as manufacture and allowed clearance of the goods under Notification No. 214/86-CE which permits the job worker to clear the goods without paying duty if the Principal undertakes to pay duty. The same activity which is treated as a manufacture cannot also be treated as an exempted service to demand an amount of 7% of the job charges under Rule 6(3) (i). 13. It is also to be noted that according to the appellant, it had reversed an amount under Rule 6(3A) which fact is not disputed by the Revenue. This reversal was not accepted as fulfilment of the obligation under Ru....
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....isions of sub-rule (2) or sub-rule (3), as the case may be : Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2. - Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined ....
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....y an amount as determined under sub-rule (3A): ......." 16. There is no dispute that the waste and scrap cleared by the appellant was exempted from payment of duty. There is also no dispute that even if the goods were not excisable, they should be considered as exempted goods. 17. The next question is whether the inputs were used to manufacture waste and scrap which raises the more fundamental question as to whether waste and scrap can be said to have been manufactured. In my considered view, waste and scrap are not manufactured by any factory but they simply arise in the course of manufacture of the final product. Waste and scrap cannot even be called by products or joint products. Waste is like the waste water generated in ....