2013 (2) TMI 490 - AT - Central Excise

Waiver of pre-deposit - Assessee is engaged in the manufacture of sugar and molasses - Bagasse, which is a residue, is cleared without payment of duty - Demand of duty in respect of the clearance of bagasse - Avail credit on common inputs and input service - Used in the manufacture of dutiable and exempted goods - Held that - Following the decision in case of INDIAN POTASH LTD.(2012 (12) TMI 347 - CESTAT, NEW DELHI)that bagasse emerges in course of crushing of sugarcane. It may be noted that crushing of sugarcane is 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. Therefore, by no stretch of imagination it can be held that the assessee possibly could have maintained separate account for the inputs for production of sugar and molasses (excisable item) and bagasse. Moreover, neither the show cause notice nor the impugned order in appeal mentions as to which common Cenvat credit availed inputs have been used in manufacture of sugar and molasses (dutiable final products) and bagasse (exempted final product). Since bagasse emerges at sugarcane crushing stage, there is no possibility of any input-chemicals etc. having been used at that stage. In favour of assessee

Summary

Issues:
- Application for waiver of pre-deposit of duty, interest, and penalty regarding the clearance of bagasse without payment of duty.
- Interpretation of availing credit on common inputs and input service used in the manufacture of dutiable and exempted goods.
- Application of the decision in the case of Indian Potash Ltd. vs. CCE, Allahabad regarding the clearance of bagasse.

Analysis:
The appellant, engaged in the manufacture of sugar and molasses, filed an application seeking a waiver of pre-deposit of duty, interest, and penalty related to the clearance of bagasse without payment of duty. The Revenue contended that the appellant availed credit on common inputs and input service used in the manufacture of both dutiable and exempted goods, making them liable to pay a percentage of the price of goods cleared without duty. The issue revolved around whether the appellant could maintain separate accounts for inputs used in the production of sugar and molasses versus bagasse, a residue of sugarcane crushing. The Tribunal's decision in the case of Indian Potash Ltd. vs. CCE, Allahabad was cited, where it was held that as bagasse emerges during sugarcane crushing and no separate account could be maintained for inputs, the appellant's liability was unfounded. The Tribunal found merit in the appellant's contention, set aside the impugned order, waived the pre-deposit, and allowed the appeal based on the precedent established in the aforementioned case.

This judgment highlights the importance of distinguishing between inputs used in the production of dutiable and exempted goods and the treatment of residues like bagasse. The Tribunal's interpretation of the applicability of availed credit on common inputs in such scenarios, as established in the Indian Potash Ltd. case, provides clarity on the issue at hand. The decision emphasizes the necessity of considering the specific circumstances of each case, especially regarding the nature of waste products like bagasse arising during manufacturing processes. By setting aside the impugned order and allowing the appeal after waiving the pre-deposit, the Tribunal ensures a fair and just outcome based on legal principles and established precedents.