2013 (5) TMI 380 - HC - Central Excise

Duty on bagasse - waste product v/s by product - whether liable to duty? - Held that - As decided in Balrampur Chini Mills Ltd. & Others Versus UOI 2013 (1) TMI 525 - ALLAHABAD HIGH COURT Bagasse generated from the crushing of the sugarcane is neither manufactured goods nor manufactured final product, but it is a residue/waste. The petitioners are not liable to duty either by payment or by reversal in respect of bagasse sold by the petitioner. In favour of assessee.

Summary

Issues:
Interpretation of bagasse as a waste product exempt from duty under Central Excise Rules.

Analysis:
The High Court addressed the controversy surrounding bagasse, a byproduct of sugarcane crushing, in light of previous judgments. The Division Bench had previously ruled that bagasse is a waste product and not subject to duty. The Court cited the case of CCE v. Shakumbhari Sugar & Allied Industries Limited, where bagasse was deemed a residue/waste and not a final product exempt from duty. This ruling was further supported by cases involving Mahalakshmi Sugar Mills and U.P. State Sugar Corporation, establishing that bagasse and press mud are not final products of manufacturers.

The Court emphasized that bagasse, despite being a marketable agricultural waste, does not involve any manufacturing activity to warrant duty imposition. The Circular issued by the Chief Commissioner in 2009, attempting to nullify previous judgments, was deemed ineffective. Bagasse was classified under a specific sub-heading in the Central Excise Tariff Act, and previous Circulars were found liable to be quashed based on the Apex Court's judgment in Commissioner of Central Excise v. Balrampur Chini Mills.

Regarding the impugned notice citing CENVAT Credit rules, the Court ruled in favor of the petitioners, stating that they were not liable to duty for bagasse sold. Consequently, penalties and interest charges were deemed unwarranted, and the petitioners were entitled to the return of the deposited amount. The Court allowed all writ petitions, quashed the Circulars and demand notice, and ordered the return of deposited duty and interest to the petitioners within a specified timeframe.

In conclusion, the Court found no reason to admit the present appeal, as the issue had been conclusively settled by previous judgments. The Tribunal's decision was upheld, and the appeal was dismissed for lacking merit.