#Rule 6(3)

CESTAT ruled that waste and scrap generated incidentally during manufacturing do not qualify as 'exempted goods' under Rule 6(3) of the CENVAT Credit Rules, 2004. The Tribunal set aside the 6% payment demand, clarifying compliance obligations for manufacturers and job-workers dealing with incidental by-products.

CESTAT rules that manufacturers retaining CENVAT credit on inputs used to produce both dutiable and exempted goods need not reverse credit merely because some final products are exempt - provided exports are made under bond. This clarifies that Rule 6(3) liability does not trigger for bonded exports, offering critical relief to export-oriented manufacturers with mixed product lines.