2008 (6) TMI 533 - AT - Central Excise

Cenvat/Modvat credit - common inputs used in dutiable and exempted goods - non-maintenance of separate records - Held that - in CCE v. Titawi Sugar Complex 2002 (11) TMI 111 - SUPREME COURT OF INDIA , the Apex Court decided that press mud is a non-excisable product. It is not exempted final product to attract provisions of Rule 6(3)(b) of CCR - appeal allowed.

Summary

Issues:
1. Interpretation of Rule 6(3)(b) of Cenvat Credit Rules regarding demand on vermi compost.
2. Classification of press mud as an intermediate or final product for excise duty purposes.

Analysis:
1. The case involved a dispute over the demand raised by the original authority on the appellant for 8% of the sale price of vermi compost cleared during specific years. The Commissioner (Appeals) vacated the demand, penalty, and interest, which was upheld by the Tribunal in a previous order. The revenue appealed this decision, arguing that press mud is an intermediate product used to manufacture vermi compost. The Tribunal, after considering the arguments and referring to the CCE v. Titawi Sugar Complex case, concluded that press mud is a waste product and not a final product. Therefore, the demand under Rule 6(3)(b) of Cenvat Credit Rules was not applicable, leading to the dismissal of the revenue's appeal.

2. The Tribunal analyzed the nature of press mud, emphasizing that it is a waste product obtained during the sugar and molasses manufacturing process. The enriched press mud and vermi compost are derived from this waste product. Referring to the findings in a previous final order, the Tribunal reiterated that for Rule 6(3)(b) of Cenvat Credit Rules to apply, the goods involved must be final products manufactured using common inputs. As press mud is a waste product, no demand can be made under the rule for bio-fertilizers produced from it. The Tribunal upheld the lower appellate authority's decision to set aside the original authority's order, emphasizing that press mud does not qualify as a product attracting the provisions of Rule 6(3)(b) of Cenvat Credit Rules. Consequently, the appeal by the revenue was dismissed, and the early hearing application was disposed of.