2015 (6) TMI 1125 - AT - Central Excise

Waste/by-product - Bagasse - excisability - reversal of CENVAT credit on GTA service - Held that - reliance placed in the case of Balrampur Chini Mills Ltd. Vs. UOI 2013 (1) TMI 525 - ALLAHABAD HIGH COURT where it was held that even after the amendment in Section 2(d) bagasse cannot be held to be an excisable item inasmuch as the same does not pass the test of manufacture as defined in Section 2(f) of Central Excise Act - appeal allowed - decided in favor of appellant.

Summary

Issues: Interpretation of Section 2(d) of Central Excise Act regarding the excisability of bagasse, reversal of credit of GTA service tax, applicability of Circular No. 904/24/2009-CX, nexus between inward cane transportation service and electricity generation for CENVAT credit.

In this judgment by the Appellate Tribunal CESTAT, Bangalore, the appellant, a sugar manufacturer, used bagasse, a by-product of sugar manufacturing, to generate electricity, part of which was sold to the State electricity board. The revenue contended that bagasse became excisable after an amendment to Section 2(d) of the Central Excise Act, leading to a demand for the reversal of GTA service tax credit. However, the Tribunal referred to the Hon'ble Allahabad High Court's decision in Balrampur Chini Mills Ltd. Vs. UOI, which held that bagasse did not qualify as an excisable item post-amendment due to not meeting the manufacturing test under Section 2(f) of the Act. The Tribunal also cited the case of Jawahar S.S.S. Ltd. Vs. CCE, Pune-II, which established that inward cane transportation service for sugar manufacturing did not have a nexus to electricity generation, thus no credit reversal or payment obligation was warranted based on the value of electricity sold. Consequently, the Tribunal set aside the lower authorities' decision, allowing the appeal and granting relief to the appellant.