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2013 (12) TMI 928 - CESTAT CHENNAISludge emerged during the process of manufacture - Whether in terms of Rule 6(3)(i), an amount equal to 10%/5% would be payable – Held that:- The goods are definitely in the nature of ‘by-product' and ‘waste' – Following Rallies India Ltd. Vs Union of India [2008 (12) TMI 46 - HIGH COURT BOMBAY] - when common inputs are used in the manufacture of dutiable and exempted products, the liability to pay the amount of 8% as it was applicable at the relevant time would arise only for final products and not for 'waste'. The Board's Circular No.345/61-97-CX, to the effect that there should be no denial of credit even if a part of an inputs is contained in scrap, waste, residue etc., notwithstanding the fact that the erstwhile Rule 57D is no longer in force – further in the CBEC's Central Excise Manual, states that CENVAT credit is also admissible respect of amounts of inputs contained in any of the waste, residue or by-product - 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 – thus, the 'sludge' is in the nature of by-product or waste and demand of amount of 10% on the value of the 'sludge' under Rule 6(1)(i) of the said Rules 2004 is not sustainable – Decided in favour of Assessee.
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