Relief for SAIL: CESTAT Holds By-Products Not Liable Under Rule 6 of CCR, Accepts Proportionate Reversal

In a significant relief for SAIL (Steel Authority of India Ltd.), CESTAT (Customs, Excise, and Service Tax Appellate Tribunal) has ruled that "by-products are not liable under Rule 6 of CENVAT Credit Rules" and accepted proportionate reversal. The tribunal clarified that CENVAT credit attributable to exempted by-products is not required to be reversed entirely, only proportionally based on their value. This decision distinguishes between principal products and incidental by-products, preventing undue burden on manufacturers like SAIL who produce various outputs. It provides much-needed clarity on the interpretation of Rule 6, ensuring fair application of CENVAT credit norms.