2026-VIL-1210-CESTAT-CHD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Excisability of Waste/By-product - The Appellant, engaged in manufacture of malt-based food products, generated barley husk as an inevitable residue during the manufacturing process. The barley husk was cleared without further processing and the department demanded payment equivalent to 5% or 6% of the clearing value of barley husk under Rule 6(3) of the CCR, 2004, contending that barley husk is classifiable under Tariff Heading 2302.40.00 and qualifies as exempted goods, thus requiring separate maintenance of accounts and apportionment of credit - Whether a waste/by-product emerges inevitably during the manufacture of a principal product without any conscious or independent manufacturing activity is liable to excise duty and whether Rule 6 of the Cenvat Credit Rules applies to such products - HELD - Manufacture requires transformation of inputs into a distinct commercial commodity having a separate name, character and use, and mere marketability or tariff classification does not dispense with the requirement of manufacture. The deeming fiction under the Explanation to Section 2(d) of the Central Excise Act comes into operation only after it is established that an article has been manufactured within the meaning of Section 2(f) of the Act - Since barley husk is neither the intended output of the manufacturing process nor brought into existence through any independent manufacturing activity, it does not qualify as a manufactured product and Rule 6 of the Cenvat Credit Rules has no application where the product in question is not manufactured and consequently is not exigible to duty - the impugned order is set aside and the appeal is allowed
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