2013 (2) TMI 415 - AT - Central Excise

Common inputs - Manufacture of dutiable as well as exempted goods - By product -Rule 57A - Assessee engaged in manufacture of sugar and ethyl alcohol (rectified spirit) - During the manufacture of the final product, press mud and spent wash come into existence and the same were mixed together and converted into bio-compost and cleared without payment of duty - Held that - Following the decision in case of Manakpur Chini (2012 (7) TMI 474 - CESTAT, NEW DELHI) that the bio-compost cleared by the sugar manufacturer is not liable to duty. In favour of assessee

Summary

Issues:
- Appeal against demand of duty on bio-compost
- Availment of Modvat Credit on common inputs

Analysis:
The case involved an appeal by the Revenue against an order passed by the Commissioner (Appeals) regarding the demand of duty on bio-compost produced by the respondents. The respondents, engaged in manufacturing sugar and ethyl alcohol, used press mud and spent wash to create bio-compost, which was cleared without duty payment. The issue revolved around the availment of Modvat Credit on common inputs used in the manufacture of dutiable and exempted goods. The adjudicating authority confirmed the duty demand, but the Commissioner (Appeals) overturned it, citing that the by-products, press mud, and spent wash, arising during the manufacturing process of alcohol were non-excisable items. The Commissioner emphasized that Rule 57D applied in cases of waste or by-products during the manufacturing process, allowing Modvat Credit without duty reversal. The Commissioner also referenced a similar decision by another authority to support the ruling.

The Tribunal, in its decision, referred to a previous case involving Manakpur Chini Mills vs. CCE, Allahabad, where it was held that bio-compost cleared by sugar manufacturers is not duty liable. Relying on this precedent, the Tribunal found no fault in the Commissioner's decision and dismissed the appeal. The judgment clarified the application of Rule 57D in allowing Modvat Credit for common inputs used in the production process, emphasizing the non-dutiable nature of the resulting by-products. The ruling provided a clear interpretation of the law in similar cases and upheld the decision in favor of the respondents, highlighting the settled nature of the issue based on previous tribunal decisions.