Case Law Details
M/s. APL Apollo Tubes Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
The issue is whether appellants have to pay an amount of 6% of the value of the zinc scrap cleared by them. The department has relied upon Explanation (1) introduced w.e.f. 01.03.2015 to demand the duty raised in the SCN. It has to be seen that though the said Explanation puts forward a deeming provision that non-excisable goods cleared by payment of consideration are also to be considered as exempted goods, there is no corresponding amendment made in sub-rule (1) of Rule 6 so that the goods that emerged out of process of manufacture falling in clause (1) are also to be considered as exempted goods. As per settled decisions, the goods which are not consciously manufactured by the appellants and which emerged in the process of manufacture cannot be considered as goods manufactured by the appellants. Thus, when the zinc scrap which is a waste arising out of process of manufacture of finished goods, is not goods manufactured by the appellant, the same cannot be considered as exempted goods manufactured by them.
FULL TEXT OF THE CESTAT JUDGEMENT
The brief facts of the case are that appellants are engaged in manufacture of Galvanised Steel Tubes & Pipes and Galvanised HR Sheets availing cenvat credit on inputs, capital goods and input services. During the course of scrutiny of accounts, it was noticed that they have contravened provisions of Rule 6 of Cenvat Credit Rules, 2004 during the period from March 2015 to June 2017 as they have not maintained separate accounts for use of inputs in the manufacture of dutiable and exempted final products (Zinc scrap cleared by them on consideration). Hence show cause notice was issued proposing to demand an amount equal to 6% of the value of the zinc scarp (exempted goods cleared by them) along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand, interest and imposed penalty. In appeal, the Commissioner (Appeals) upheld the demand, interest however reduced the penalty to 10%.
2. The Ld. Counsel Shri R.S. Sharma appeared and argued the matter on behalf of the appellant. He submitted that appellant is not manufacturing ‘zinc scrap’ and these goods emerged as waste in the process of manufacture of finished products. Appellant has no intention to manufacture zinc scrap and therefore these cannot be considered as exempted goods manufactured by the appellant. Though Explanation (1) was added to Rule 6 (1) of CCR, 2004 with effect from 1.3.2015, the same cannot be applied in respect of zinc scrap cleared by the appellant for the reason that sub-rule (1) of Rule 6 has not been amended so as to make the zinc scrap emerging out of manufacture of dutiable goods to be exempted goods manufactured by the appellants. He relied upon the decision of the Tribunal in the case of Bajaj Hindusthan Sugar Ltd. vide Final Order No.70955-70958/2019 dt. 15.05.2019 and M/s.Triveni Engineering & Industries Ltd. Vs CC & C.E. & ST Noida in Final Order No.71157/2018 dt. 19.06.2018.
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