M/S. Ismt Ltd vs Commissioner Of Central Excise, Pune

[Arising out of Order-in- Appeal No. P-III/RS/352/2011 dtd. 30/11/2011 passed by the Commissioner of Central Excise(Appeals-III), Pune]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

=======================================================

1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

M/s. ISMT Ltd. : Appellants

VS

Commissioner of Central Excise, Pune : Respondent

Appearance

Ms. Anjali Hirawat, Advocate for the Appellant Shri. Ashitosh Nath. Asst. Commissioner(A.R.) for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 7/5/2015 Date of decision: 7/5/2015

ORDER NO. Per : Ramesh Nair

This appeal is directed against Order-in- Appeal No. P-III/RS/352/2011 dtd. 30/11/2011 passed by the Commissioner of Central Excise(Appeals-III), Pune, wherein the Commissioner(Appeals) has upheld the order-in-original No. 05/CEX/PIX/2011 dated 17/8/2011 and rejected appeal of the appellant. The fact of the case is that appellant is engaged in the manufacture of excisable goods Viz. Alloys and Non-alloy Cast and Rolls falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985. During the course of manufacture, Slag arises which is waste material. They have cleared the slag without payment of duty. Show cause notice F. No. V/15-322/Adj./ISMT/PIX/11 dated 5/4/2011 was issued demanding an amount of Rs. 98,595/- for the period April 2006 to February 2008 as appellant was required to pay an amount equivalent to 10% of the value of slag in terms of Rule 6(3)(i) and (ii) of Cenvat Credit Rules, 2004. Demand in the adjudication order was confirmed and equal amount of penalty under Section 11AC and interest under Section 11AB was also demanded. Aggrieved by the said order the appellant filed appeal before the Commissioner(Appeals), who rejected appeal of the appellant therefore appellant is before me.

2. Ms. Anjali Hirawat, Ld. Counsel for the appellant submits that slag is arising unavoidably during the course of manufacture of their final product i.e. Alloys and Non-alloy Cast and Rolls. The demand of 10% provided under 6(3)(i) of Cenvat Credit Rules 2004 is not applicable in case of removal of waste, scrap, by-product, refuse in terms of Para 3.7 of Chapter 5 of CBECs Excise Manual of Supplementary Instructions 2005, which provides that Cenvat credit shall be allowed in respect of input contained in waste, by product refuse. It is her submission this issue on merit has been settled in various judgments by Honble Supreme Court and Tribunal judgments which are as under:

(a) UOI Vs. Hindustan Zinc Ltd. [2014(303) ELT 321 (SC)

(b) Rallis India Ltd. Vs. UOI[2009(233)ELT 301(Bom.)

(c) Cadbury India Ltd. Vs. CCE[2015-TIOL-714-CESTAT-MUM]

3. On the other hand, Shri. Ashutosh Nath, Ld. Asstt. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order.

4. I have carefully considered the submissions made by both sides and perused record.

5. The issue involved that whether amount of 10% of the value of Slag payable in terms of Rules 6(3)(i) of Cenvat Credit Rules, 2004. The fact of the case is not under dispute that goods is slag arising out of the manufacturing of final product i.e. Alloys and Non-alloy Cast and Rolls. This slag arises unavoidably during the course of manufacture. Therefore slag is nothing but waste. In terms of Para 3.7 of Chapter 5 of CBECs Excise Manual of Supplementary Instructions 2005, which reproduced below:

3.7 CENVAT credit is also admissible in respect of the amount of inputs contained in any of the waste, refuse or bye product. Similarly, CENVAT is not to be denied if the inputs are used in any intermediate of the final product even if such intermediate is exempt from payment of duty. The basic idea is that CENVAT credit is admissible so long as the inputs are used in or in relation to the manufacture of final products, and whether directly or indirectly.

Above para of instruction manual provides that Cenvat credit is admissible even in respect of input contained in any waste, refuse or by-product. Therefore demand under Rule 6(3)(i) of Cenvat Credit Rules is not maintainable. This issue was time and again considered in various judgment and finally Honble Supreme Court in the case of Hindustan Zinc Ltd.(supra) held that demand under Rule 6(3)(i) is not sustainable in respect of waste, by product, refuse cleared without payment of duty. In view of the above settled legal position, I am of the considered view that demand of 10% of the value of Slag cleared by the appellant under NIL rate of duty is not sustainable. The impugned order is set aside and appeal is allowed.

(Dictated in court)

Ramesh Nair Member (Judicial) sk

4