2019 (2) TMI 403 – CESTAT HYDERABAD – TMI – CENVAT Credit – waste arising during the manufacture is cleared for a consideration – demand of reversal of CENVAT credit proportionate to the value of the waste BOPP film and waste paper scrap cleared – explanation (1) to Rule 6 (1) of the CENVAT Credit Rules, 2004 – Held that:- This issue is no longer res integra and it has been held in the cases of Menon & Menon [2017 (12) TMI 85 – CESTAT MUMBAI] and M/s Shivratna Udyog Ltd [2017 (9) TMI 985 – CESTAT MUMBAI] that explanation (1) to Rule 6 of CENVAT Credit Rules, 2004 covers non-excisable goods manufactured or produced using inputs on which CENVAT credit has been availed. It does not cover waste material which arises during the process of manufacturing even if the same is cleared for some consideration.
–
Appeal allowed – decided in favor of appellant. – Appeal No. E/30609/2018 – A/31566/2018 – Dated:- 19-11-2018 – Mr. P. Venkata Subba Rao, Member (Technical) Shri S. Thirumalai, Advoca
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
n terms of Rule 6 of the CENVAT Credit Rules, 2004, the CENVAT credit shall not be allowed on such quantity of input as is used in or in relation to the manufacture of exempted goods or for provision of exempted services or input services as is used in or in relation to the manufacture of exempted goods and their clearance up to the place of removal. Explanation (1) has been added to this Rule as follows. For the purpose 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 consideration from the factory. 4. The department s contention is that in view of the explanation (1) to Rule 6 of CENVAT Credit Rules, 2004, the BOPP film and waste paper scrap, both of which are admittedly waste materials, should be treated as non-excisable goods cleared for consideration and proportionate amount of CENVAT credit has to be reversed. 5. Learned counsel would draw the attention of the Bench to the case of Menon & Meno
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
kimmings of non-ferrous metals or any such by-product or waste, which are non-excisable goods and are cleared for a consideration from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and input services, in terms of rule 6 of the CENVAT Credit Rules, 2004. 7. In view of the above, learned departmental representative would argue that the legal position with respect to reversal of CENVAT credit under Rule 6 (1) post introduction of explanation (1) therein has been clarified by the CBEC. Therefore, according to the said circular, the same needs to be followed. 8. I have considered the arguments on the both sides. The short point to be decided is whether in view of the explanation (1) to Rule 6 (1) of the CENVAT Credit Rules, 2004, CENVAT credit needs to be reversed when waste that arises during the manufacture is cleared for a consideration by the assesee. This issue is no longer res integra and it has been held in the cases of Menon &
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =