2013 (2) TMI 333 - HC - Central Excise

Duty demand on Bagasse - Held that - Bagasse is classified under sub-heading 2303 20 00 of Central Excise Tariff Act. Neither the penalty nor the interest can be charged from the petitioners in view of the fact that the petitioners are not liable to duty either by payment or by reversal in respect of bagasse sold by the petitioner. As the petitioners have paid the entire duty and interest under protest the entire deposited amount shall returned to them. Impugned Circular dated 28.10.2009 issued by the Central Board of Excise and Customs the Circular dated 3.10.2009 issued by the Central Excise U.P. Lucknow and demand notice dated 24/27.9.2010 issued by the Joint Commissioner Customs Central Excise and Service Tax are hereby quashed.

Summary

Issues involved:
Imposition of duty on Bagasse; Validity of Circulars and demand notices; Applicability of Rule 6 of CENVAT Credit; Refund of duty and interest paid under protest.

Imposition of duty on Bagasse:
The appellant's counsel argued that the appellant has the right to impose duty on Bagasse. However, the judgment and order dated 18.5.2012 by a Division Bench of the Court stated that Bagasse is classified under a specific sub-heading of the Central Excise Tariff Act. Referring to a judgment of the Apex Court, it was concluded that Circulars of the Chief Commissioner, Central Excise, and Circulars of Central Board of Excise and Customs, forming the basis for the demand, are liable to be quashed. The Court held that no duty could be imposed on Bagasse, as settled by a previous Division Bench judgment. Therefore, the Tribunal's order was upheld, and the appeal was dismissed.

Validity of Circulars and demand notices:
The impugned notice dated 27.9.2010 mentioned the requirement to pay a certain amount based on Rule 6 of the CENVAT Credit for exempted final products. The Court ruled that penalty or interest cannot be charged from the petitioners as they were not liable to duty for Bagasse sold by them. Consequently, the Circulars issued by the Central Board of Excise and Customs, Central Excise, U.P., Lucknow, and the demand notice issued by the Joint Commissioner were quashed. The Court directed the refund of the duty and interest paid under protest to the petitioners within a specified timeframe.

Applicability of Rule 6 of CENVAT Credit:
The Court analyzed the provisions of Rule 6 of the CENVAT Credit regarding the payment required for exempted final products. It was established that the petitioners were not liable to duty for Bagasse, and therefore, the penalty and interest charged were deemed unjustified. The Court ordered the return of the entire deposited amount to the petitioners.

Refund of duty and interest paid under protest:
Since the petitioners had paid the duty and interest under protest, the Court directed the return of the entire deposited amount to them within a maximum period of four weeks from the date of the order. The judgment emphasized the settled legal position that no duty could be imposed on Bagasse, and the question of law raised by the appellant's counsel had already been conclusively decided by a Division Bench of the Court. Consequently, the Tribunal's order was upheld, and the appeal was dismissed.