2016 (9) TMI 1317 - 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:
Whether the appellant is liable to reverse the proportionate CENVAT Credit taken on service tax paid in respect of GTA service utilized for transportation of sugar cane.

Analysis:

The appeal was directed against the Order-in-Appeal passed by the Commissioner (Appeals), partially upholding the order-in-original. The appellants, who are manufacturers of sugar, molasses, rectified and denatured spirit, were availing CENVAT credit of service tax paid on GTA services for the transportation of sugar cane. The issue revolved around the appellant's liability to reverse the proportionate CENVAT Credit taken on service tax paid in relation to GTA services utilized for transporting sugar cane. A show-cause notice was issued to demand proportionate CENVAT Credit on input services wrongly availed towards electricity sold outside. The Assistant Commissioner confirmed the demand, imposed a penalty, and interest. The appellant filed an appeal, and the Commissioner (Appeals) upheld the order but reduced the penalty. The main contention was whether the appellant should reverse the CENVAT Credit due to the electricity generation process involving bagasse, a waste product from sugar manufacture, used for producing electricity.

Upon hearing both parties and examining the records, the Judicial Member referred to relevant legal precedents, including the decision of the Hon'ble Allahabad High Court and other cases where similar issues had been settled in favor of the assessee. Quoting the cases of Balrampur Chini Mills Ltd Vs UOI, UOI Vs DSCL Sugar Ltd, Gularia Chini Mills Vs UOI, and CCE Vs Shree Datta SSK Ltd, the Judicial Member concluded that the issue was squarely covered in favor of the appellant. Citing the legal position established in the aforementioned cases, the appeal was allowed, setting aside the impugned order with consequential relief if any. The judgment was pronounced in open court, providing a favorable outcome for the appellant based on the legal precedents and the specific circumstances of the case.