2013 (8) TMI 157 - AT - Central Excise

Rule 6(3) and Rule 6(2) of Cenvat Credit Rules, 2004 - Appellants are manufacturers of sugar and molasses. In the course of manufacture of sugar at the stage of crushing of sugar cane Bagasse arises and subsequently at the stage of cleaning of cane juice impurities in the form of mud called press mud arises Since the separate account and inventory of inputs/input services used in manufacture of dutiable and exempts goods has not been maintained as per the provisions of Rule 6(2) of Cenvat Credit Rules, 2004 in respect of clearances of Press mud and bagasse and amount at the rate of 5% of their sale value would be chargeable in terms of Rule 6 (3) of Cenvat credit Rules, 2004 Held that - Relying upon the decision in the case of Indian Potash 2012 (12) TMI 347 - CESTAT, NEW DELHI as in the case of Uttam Sugar Mills Ltd. Vs. CCE, Meerut I 2006 (2) TMI 546 - CESTAT, NEW DELHI has held that Rule 6(3) of Cenvat Credit Rules is not applicable in the case of clearance of bagasse and press mud that same view has been taken by the Tribunal in the case of appellants own case reported in 2013 (4) TMI 180 - CESTAT NEW DELHI Appeal allowed Decided in favor of Assessee.

Summary

Issues:
1. Applicability of Rule 6(3) of Cenvat Credit Rules on bagasse and press mud.
2. Interpretation of excisability of bagasse and press mud.
3. Validity of demand raised by the department.

Analysis:
1. The appellants, manufacturers of sugar and molasses, faced a demand by the department under Rule 6(3) of Cenvat Credit Rules for not maintaining separate accounts for inputs used in the manufacture of exempted (bagasse and press mud) and dutiable goods (sugar and molasses). The demand was based on the assumption that bagasse and press mud are excisable goods with nil rates of duty. The Assistant Commissioner confirmed the demand, which was upheld by the Commissioner (Appeals).

2. The appellant argued that bagasse and press mud are not excisable goods, citing a judgment of the Allahabad High Court in the case of Balrampur Chini Mills. They contended that Rule 6(3) of Cenvat Credit Rules should not apply to the clearance of bagasse and press mud. The Tribunal, considering the judgments of the Allahabad High Court and its own precedents, agreed with the appellant's interpretation. The Tribunal found the impugned order unsustainable and set it aside, allowing the appeal and stay petition.

3. The department defended the impugned order, asserting that bagasse and press mud are excisable goods under the amended provisions of the Central Excise Act. However, the Tribunal, after reviewing the submissions and records, concluded that the issue had been decided in favor of the appellant by both the Allahabad High Court and several Tribunal judgments. Consequently, the impugned order was deemed unsustainable, and the appeal, along with the stay petition, was allowed.