No application of Rule 6(3) of CCR on Zinc Scrap produced from manufacture of Galvanized Pipes: CESTAT [Read Order]

A Single Bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ), held that Rule 6(3) of Cenvat Credit Rules, 2004 has no application on zinc scrap produced from manufacture of Galvanized pipes.

The appellant, M/s. APL Apollo Tubes Ltd is engaged in manufacturing of MS Black Pipes and Galvanised from Pipes and during its manufacturing process unusable residue in the form of zinc dross, zinc dust and flux skimming are generated which cannot be avoided. As per department the said residue is exempted goods and hence provisions of Rule 6(3) of Cenvat Credit Rules, 2004 are attracted.

Accordingly, two show cause notices were issued to the appellant along with interest and equal penalty. The Adjudicating Authority confirmed the demand with interest and penalty and the same was upheld by the Commissioner (Appeal). Hence the present appeal has been preferred.

The Counsel for the appellant, R.S. Sharma submitted that they are manufacturing pipes and not zinc scrap and that during the manufacture of excisable goods, unusable residue is generated which is sold as zinc dross or cyclone or ash in the open market and also submitted that Rule 6 of CCR, 2004 has no application on the facts of this case.

The Counsel for the Revenue, Xavier Mascarenhas, reiterated the findings recorded in the order and supported the order.

The Tribunal relied on the judgment in Lakshmi Metal Udyog Ltd. vs. Commr of Central Tax, Bangaluru South wherein it was held that “Rule 6 of the CCR, 2004 is not applicable to the waste products which arises during the process of manufacture and is sold for some consideration. The appellant is not the manufacturer of zinc waste or dross which comes into existence during the manufacture of Galvanized Steel Pipes or Tubes.”

The same decision has been re iterated by different Benches of the Tribunal in different cases.

The Bench of Ajay Sharma, Judicial Member observed that “In view of decisions of different Benches of the Tribunal deciding the issue in favour of the assessee, even after considering the amendment made in Rule 6 of CCR, I am inclined to set aside the impugned order and the same is accordingly set aside.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates