2013 (1) TMI 472 - AT - Central Excise

Cenvat credit of excise duty paid on inputs - bagasse and press mud emerging during crushing of sugar cane and purification of cane juice alleged non maintenance of separate account and inventory of the inputs used in or in relation to manufacture of dutiable final products - amount equal to 5%/10% of the sale value of bagasse/press mud would be payable in terms of the provisions of Rule 6 (3) (b) of the Cenvat Credit Rules, 2004 Held that - Issue stands decided in favour of the appellants not only by the judgment of Balrampur Chini Mills Ltd. vs. Union of India 2003 (5) TMI 74 - HIGH COURT OF JUDICATURE AT ALLAHABAD but also in case of Indian Potash Ltd. vs. CCE, Allahabad 2012 (12) TMI 347 - CESTAT, NEW DELHI that Bagasse emerges in course of crushing of the sugarcane, a necessary to extract cane sugar juice which in turn is processed for production of sugar and molasses. Bagasse is the waste product left after the crushing of sugarcane - no need to maintained separate accounts for the inputs for production of sugar and molasses (excisable item) and bagasse in favor of assessee

Summary

Issues:
Interpretation of Rule 6(3)(b) of the Cenvat Credit Rules, 2004 regarding payment on bagasse and press mud in the manufacture of sugar.

Analysis:
The judgment by the Appellate Tribunal CESTAT New Delhi involved a crucial issue regarding the payment of an amount equal to 5% or 10% of the sale value of bagasse and press mud in the context of manufacturing sugar from cane sugar. The dispute revolved around whether this payment was required under Rule 6(3)(b) of the Cenvat Credit Rules, 2004. The department argued that since the appellant did not maintain separate accounts for inputs used in dutiable final products and exempted final products, the payment was necessary. The department considered bagasse and press mud as exempted goods under Rule 2(d) of the Cenvat Credit Rules, 2004.

Both parties agreed that the issue had been settled in favor of the appellants by previous judgments. The judgment of the Hon'ble Allahabad High Court in the case of Balrampur Chini Mills Ltd. vs. Union of India, along with the Tribunal's final orders in cases such as Indian Potash Ltd. vs. CCE, Allahabad, and Kisan Sahkari Chinni Mills Ltd. vs. CCE, Lucknow, supported the appellants' position. These precedents established that the payment under Rule 6(3)(b) was not applicable in such cases.

Consequently, the Appellate Tribunal CESTAT New Delhi ruled that the impugned orders were not sustainable and set them aside, thereby allowing the appeals in favor of the appellants. The judgment provided clarity on the interpretation of Rule 6(3)(b) in the context of bagasse and press mud in the manufacture of sugar, aligning with the precedents set by previous judicial decisions.