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2021 (11) TMI 896 - AT - Central ExciseCENVAT Credit - manufacture of exempt product namely ‘sludge’ - appellants have used common inputs for manufacture of dutiable product (Gelatine) and exempted product (Sludge) - non-maintenance of separate records - Rule 6 (3) of Cenvat Credit Rules, 2004 - period from 10.05.2008 to 30.09.2011 - HELD THAT:- The demand has been raised on the view that the sludge removed is an exempted goods manufactured by the appellants. The appellant does not consciously manufacture any waste. During the course of manufacture, the waste that arises is drained into the Effluent Treatment Plant. Thus, waste removed from the Effluent Treatment Plant forms sludge and is removed on a daily basis to a dump yard from where it gets dried and is thereafter sold to fertilizer manufacturers. The appellant has to comply with the pollution control requirements and therefore maintain the Effluent Treatment Plant and remove the waste as per the effluent norms. A manufacturer would be happy when there is less waste or no waste at all since the burden of maintaining the effluent treatment plant and the transportation of the sludge etc. can be minimized. No manufacturer would consciously manufacture waste. For these reasons, it cannot be said that the waste / sludge is an ‘exempted goods’ manufactured by the appellant. The said issue stands considered by the Tribunal in the case of ITC LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM [2013 (12) TMI 928 - CESTAT CHENNAI]. In fact, the Commissioner (Appeals) has cited the said decision to set aside the demand prior to 10.05.2008. It has to be stated that even after 10.05.2008, though the Explanation to Section 2(d) states that any article, material or substance which is capable of being bought and sold for a consideration will also fall within the definition of “goods”, in the present case, the appellants having not manufactured the waste consciously, it cannot be considered as an ‘exempted goods’ falling under Rule 6 (3) of CCR 2004. The demand cannot sustain - appeal allowed - decided in favor of appellant.
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