Glaxo Smithkline Consumer Healthcare Ltd Vs Commissioner of Central Excise (CESTAT Chandigarh)
The appeal challenged the Order-in-Appeal dated 22.10.2019, which had upheld the Order-in-Original dated 16.06.2019 confirming a demand under Rule 6(3) of the CENVAT Credit Rules, 2004. The appellant manufactures malt-based food products and avails CENVAT credit on inputs, input services and capital goods. During manufacture, barley husk emerges as a residue, waste or by-product and is cleared without further processing. The department alleged that barley husk was an exempted product classifiable under Tariff Heading 2302.40.00 and that the appellant had availed CENVAT credit on common inputs without maintaining separate accounts, making it liable to pay 5% or 6% of the value of barley husk under Rule 6(3), along with interest and penalty.
The appellant contended that barley husk is not a manufactured final product but an inevitable residue or by-product arising during manufacture of dutiable products and that no separate manufacturing activity is undertaken to produce it. It further submitted that the issue stood settled by the Supreme Court in Union of India vs. DSCL Sugar Ltd., which held that the deeming fiction relating to marketability applies only after manufacture is established and that Rule 6 does not apply where the product is not manufactured. The appellant also submitted that the departmental circular relied upon in the show cause notice had been withdrawn and referred to several Tribunal decisions and orders relating to its other manufacturing units.
