By TIOL News Service

MUMBAI, MAY 07, 2014: THE appellant is a manufacturer of biscuits and during the course of manufacture certain inputs like vanaspati, maida etc. fall down on the floor. To clean the floor the appellant is required to sweep the floor and these ‘sweepings' upon selling fetch certain amount to the appellant as it is used as animal feed. As same is held not excisable, the revenue is of the view that CENVAT credit on these inputs which have gone in the floor sweeping is required to be reversed. Therefore, the impugned proceedings were initiated against the appellant. During the course of investigation, the appellant also paid certain amount as duty on floor sweeping.

As "floor sweepings" is held as not excisable in the case of Britannia Industries 2002-TIOL-518-CESTAT-DEL, the appellant filed a refund claim in respect of the duty paid by them but the same was rejected.

Hence appeals have been filed before the CESTAT. An unconditional stay in the matter of demand under rule 6 of the CCR, 2004 was granted by the Bench vide its order reported as 2007-TIOL-126-CESTAT-MUM.

The appeals were heard recently.

The appellant relied on the decision of the Karnataka High Court in the case of CCE vs. Geltec Ltd. 2011-TIOL-968-HC-KAR-CX wherein it is held that credit on inputs contained in the waste is not required to be reversed. It was also submitted that for subsequent period, in appellant's own case, the Commissioner (Appeals) has held in their favour, therefore, impugned ordersare required to be set aside and the appeals be allowed with consequential relief.

The Revenue representative placed reliance on the Tribunal decision in Sahni Strips & Wires P. Ltd. 2012-TIOL-2051-CESTAT-DEL and submitted that as the floor sweeping are non-excisable, therefore, the appellants are not entitled to take CENVAT credit on the inputs attributable to floor sweeping.

The Bench observed -

"6. The appellant is a manufacturer of biscuits and during the course of manufacture of biscuit these floor sweeping emerges which are the waste for the appellant. Although, these floor sweeping gets certain value, but it cannot be said the appellants are manufacturing the said floor sweepings. Therefore, relying on the decision of Hon'ble High Court of Karnataka in Geltec Ltd. (supra), I hold that appellants are not required to pay duty on these floor sweeping being waste. Further, I hold that appellants are not required to reverse Cenvat credit attributable to generation of these floor sweepings as same has been emerged during the course of manufacture of final product i.e. biscuits. In these terms, I set aside the impugned orders and allow the refund claim on the duty paid on the floor sweeping of the appellant."

The Appeals were disposed of.

(See 2014-TIOL-713-CESTAT-MUM)