2026-VIL-1183-CESTAT-DEL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - CENVAT Credit - Job Work Service - Demand under Rule 6(3) of CENVAT Credit Rules, 2004 - Appellant manufactured goods for principal as job worker and goods were cleared without payment of duty under Notification No. 214/86-CE – Whether demand of amount under Rule 6(3)(i) of CENVAT Credit Rules, 2004 on job work charges can be sustained – HELD - As far as the manufacture of the goods on job work basis is concerned, the department considered it as manufacture and allowed clearance of the goods under Notification No. 214/86-CE. The same activity which the department considered as manufacture and exempted from duty cannot also be treated as exempted service to demand amount under Rule 6(3)(i) – Further, Department cannot demand an amount under Rule 6(3) when the appellant has already reversed an amount under Rule 6(3A), as such reversal constitutes compliance with Rule 6 obligations and it is a technical requirement that cannot override substantive compliance - The demand of an amount equal to 7% of the job charges under Rule 6(3) from the appellant cannot be sustained - The impugned order is set aside and the appeal is allowed - Waste and Scrap - Demand under Rule 6(3) of CENVAT Credit Rules, 2004 - Appellant cleared wooden pallets, PVC pipes, iron strips, HDPE sheets which were exempted from duty – Whether inputs used in manufacturing final products can attract demand under Rule 6(1) and Rule 6(3)(i) for waste and scrap – HELD – The waste and scrap do not constitute manufactured goods but merely arise incidentally in the course of manufacture of final products. Waste and scrap cannot be said to have been manufactured using inputs or input services. To fall within the purview of Rule 6(1), goods must be exempted or non-excisable and must have been manufactured. Since waste and scrap are not manufactured by the factory but arise as byproducts, Rule 6(1) does not apply to them and therefore demand under Rule 6(3)(i) cannot be sustained.
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