2012 (8) TMI 1005 - AT - Central Excise

CENVAT credit - common inputs used in the manufacture of dutiable as well as exempt goods - Held that - paragraph 3.7 in Chapter 5 of the CBEC s Central Excise Manuel (sic) states that CENVAT credit is also admissible in respect of amounts of inputs contained in any of the waste residue or by-product. It further states that the basic idea is that CENVAT credit is admissible so long as the inputs are used in or in relation to the manufacture of final products - appeal allowed.

Summary

Issues:

1. Whether bagasse and press mud can be treated as manufactured goods?
2. Whether the demands for duty on bagasse and press mud are sustainable?
3. Whether the provisions of Rule 6 of CENVAT Credit Rules, 2004 apply in this case?

Analysis:

1. The issue revolves around determining whether bagasse and press mud can be considered as manufactured goods. The appellant argued that both are manufactured goods, citing relevant legal precedents. The Revenue contended that bagasse and press mud are excisable goods, classifiable under specific tariff headings. The Revenue relied on the interpretation of the terms "produce" and "manufacture" in the commercial context to support their argument. The Tribunal analyzed the arguments and legal precedents cited by both parties to reach a conclusion.

2. Regarding the sustainability of demands for duty on bagasse and press mud, the Tribunal examined the provisions of Rule 6 of CENVAT Credit Rules, 2004. The Revenue invoked Rule 6 to demand payment based on the lack of separate accounts for exempted goods. However, the Tribunal considered the settled legal positions established by previous judgments. The Tribunal referred to the decision in the case of Balrampur Chini Mills Ltd. regarding bagasse and the case of Amaravathi Co-operative Sugar Mills Ltd. concerning press mud to determine the applicability of Rule 6 in this scenario.

3. The application of Rule 6 of CENVAT Credit Rules, 2004 was a crucial aspect of the case. The Rule mandates maintaining separate accounts for exempted goods when common inputs are used. The Revenue argued that bagasse and press mud being excisable goods require payment under Rule 6. However, the Tribunal, after thorough analysis of legal precedents and interpretations, concluded that the demands based on Rule 6 were not sustainable in this case. The Tribunal highlighted the specific rulings and decisions that supported their conclusion, ultimately setting aside the impugned order and allowing the appeal while waiving the pre-deposit of dues.

This comprehensive analysis of the judgment provides a detailed insight into the legal issues involved and the Tribunal's reasoning behind the decision.