CENVAT Credit of Excise Duty Allowable on Spent Solvent considered as Raw Materials in form of drums/barrels which Received by Manufacturer [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the CENVAT credit of excise duty allowable on spent solvent which was considered as raw materials in the form of drums or barrels which was received by the manufacturer. 

Alkem Laboratories Ltd, the appellant assessee engaged in the manufacture of excisable goods falling under Chapters 21 and 29 of Schedule to the Central Excise Tariff Act, 1985, and also availing CENVAT Credit of duty paid on capital goods, inputs used in or concerning the manufacture of finished goods. 

The assesse appealed against the order passed by the Commissioner (Appeals) for confirming the excise duty demand and for the imposition of penalty under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002. 

Ishan Bhatt, the counsel for the assessee contended that waste in the form of drums/barrels in which the raw materials received by the manufacturer could not be treated as waste arising out of the processing of the inputs for which credit had been taken and consequently no duty was leviable on such drums/barrels/containers cleared from the factory. 

P K Singh, the counsel for the department relied on the decisions made by the lower authorities and contended that the parts and components after a certain period of use get worn out and have to be replaced therefore the worn-out parts and components are scrapped from time to time and same are cleared without payment of duty as at the time of the purchase of the same and no CENVAT Credit had been availed on the same and same not being the manufactured goods of the assessee. 

The Bench observed that in the case of CCE Vs. West Coast Industrial Gases Ltd, the court held that no duty shall be payable and no reversal of the credit is warranted on waste packages or containers used for packing the inputs on which credit has been taken when cleared from the factory of the manufacturer had availed CENVAT Credit as the same could not be treated as scrap on waste arising out of manufacturing process. 

The two-member bench comprising Ramesh Nair (Judicial) and C L Mahar (Technical) held that the assessee was eligible for the CENVAT credit while allowing the appeal filed by the assessee. 

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