TMI Blog2010 (7) TMI 435X X X X Extracts X X X X X X X X Extracts X X X X ..... OF 2009 - 759-760/2010-SM(BR) - Dated:- 7-7-2010 - M. VEERAIYAN, JJ. ORDER 1. Appeal No. 1290 of 2008 is against the order of the Commissioner (Appeals) No. 61(RKS)/CE/JPR-I/2008, dated 26-3-2008 upholding the demand of duty of Rs. 4,84,992 along with interest but reducing the penalty from Rs. 4,84,992 to Rs. 50,000. 1.2 Appeal No. 932 of 2009 is against the order of the Commissioner (Appeals) No. 08(DK)/CE/JPR-I/2009, dated 20-1-2009 by which recovery of Cenvat credit of Rs. 5,35,897 along with interest and imposition of penalty of Rs. 10,000 was upheld. 1.3 Both these appeals involve identical issues and, therefore, are being disposed of by this common order. 2. Heard both sides. 3. The relevant facts in brief are as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty-paid granules and took credit of duty paid on the quantity of granules earmarked for dutiable medicines including the waste and scrap arising out of the process of manufacture of dutiable medicines and as far as the granules used for the manufacture of exempted medicines, they took credit only on the estimated quantity of granules which were attributable to waste and scrap of plastic which were cleared on payment of duty. Show-cause notices were issued alleging that the credit taken on the waste and scrap of plastic arising out of manufacture of exempted medicines is in contravention of rule 6(1) of the Cenvat Credit Rules, 2004. In pursuance to the show-cause notices, the original authority confirmed demands of duty holding that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmula has been disclosed to the department from time-to-time and if there was any doubt, the department should have verified the correctness of the claim made by them. He relies on the Circular of the Board in F.No. 345/20/2000-TRU, dated 29-8-2000 to contend that the credit can be utilised for paying duty on waste and scrap as well. He also relies on the decision of the Tribunal in the case of PSL Ltd. v. CC CE 2007 (214) ELT 238 (Trib. - Bang.) wherein taking note of the Board s Circular dated 29-8-2000, the payment of duty on waste and scrap using Cenvat credit stands upheld. 5. Ld. SDR strongly supports the orders of the Commissioner (Appeals). As regards the process of manufacture of exempted medicines, the appellants have made an ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tic is about one-eighth of the price per kg. of granules. Obviously, the appellants have no intention to exclusively manufacture waste and scrap using costly granules. Having said that, it is not the case that the appellants could have avoided generation of waste and scrap of plastics during the course of manufacture of medicines whether dutiable or exempted. In respect of process of manufacture of dutiable medicines, there is no dispute that the appellants are taking the Cenvat credit on granules and using the same for paying duty on the medicines as well as on the waste and scrap of plastics. The emergence of waste and scrap is inevitable. They are excisable goods and they pay duty and the liability to duty of such waste and scrap is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in relation to non-dutiable products. 9. In view of the above, the appeals are disposed of as follows : (1) The waste and scrap of plastic has been rightly claimed to be one of the final products by the appellants and duty paid by them. (2) As the duty liability of waste and scrap of plastic is not in dispute, the appellants are entitled to credit on granules attributable to such waste and scrap of plastic. The appeals are allowed on merits by setting aside the orders of the authorities below. (3) The original authority shall verify the correctness of the claim regarding the quantum of credit attributable to such waste and scrap and for this purpose, the matter isremanded to the original authority. - - TaxTMI - TMITax - Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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