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Issues involved: Interpretation of Rule 6 of CENVAT Credit Rules, 2004 regarding payment of duty on clearance of Bagasse generated during sugarcane crushing.
Summary: Issue 1: Interpretation of Rule 6 of CENVAT Credit Rules, 2004 The appellants, engaged in sugar manufacturing, cleared Bagasse without payment of duty. The demand was made u/s Rule 6 of CENVAT Credit Rules, 2004, alleging credit taken on common inputs. The issue was settled by the Hon'ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd. vs. Union of India, where it was held that Bagasse is a residue/waste, not a manufactured product. The Tribunal in the case of Indian Potash Ltd. also supported this view, stating that Bagasse emerges as waste after sugarcane crushing, making it impossible to maintain separate accounts for inputs. The impugned orders were set aside, and appeals allowed, as the issue had already been decided in previous judgments. Conclusion: The judgment clarified that Bagasse, being a residue of sugarcane crushing, does not attract duty under Rule 6 of CENVAT Credit Rules, 2004. The decisions of the High Court and Tribunal supported this interpretation, emphasizing the nature of Bagasse as waste and the impracticality of segregating inputs at the crushing stage. The impugned orders were overturned, and the appeals were allowed based on the settled legal position.
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