2013 (10) TMI 990 - AT - Central Excise

CENVAT Credit on input and input services Rule 6(3) of CE Rules - Waiver of Pre-deposit - Whether the applicant is liable to pay an amount equal to 5% / 10% of the value of the exempted goods under Rule 6(3) of the CENVAT Credit Rules, 2004 Held that - On this issue the Hon ble High Courts and the Tribunal in various decisions held that bagassee, press-mud etc. are not excisable goods and therefore Rule 6(3) of the CENVAT Credit Rules, 2004 would not apply - Following Gularia Chini Mills Vs. Union of India & Ors. 2013 (7) TMI 159 - ALLAHABAD HIGH COURT - demand of 5% / 10% on electricity cleared from the factory under Rule 6(3) of the CENVAT Credit Rules, 2004 - and CCE, Pondicherry Vs. EID Parry (I) Ltd. 2013 (3) TMI 366 - MADRAS HIGH COURT - in respect of bagassee, press-mud etc. Respectfully following the decisions of the Hon ble High Courts, as above, we grant waiver of pre-deposit of entire amount of duty along with interest and penalty and stay its recovery during the pendency of the appeal - Stay granted.

Summary

Issues:
Whether the applicant is liable to pay an amount equal to 5% / 10% of the value of exempted goods under Rule 6(3) of the CENVAT Credit Rules, 2004.

Analysis:
The applicant, engaged in sugar and molasses manufacturing, availed CENVAT credit on inputs for dutiable goods but cleared by-products like bagassee, press-mud, vermin-compost, and electricity without duty payment. The issue revolved around the liability to pay a percentage of the value of exempted goods under Rule 6(3) of the CENVAT Credit Rules, 2004, with a demand of Rs.97,63,007/-, interest, and penalty for the period May 2006 to August 2011.

The Tribunal considered precedents where it was established that by-products like bagassee and press-mud were not excisable goods, thus Rule 6(3) would not be applicable. Reference was made to the decisions of the Hon'ble High Courts of Allahabad and Madras, which ruled similarly regarding the demand on electricity and by-products. Citing the decisions of Gularia Chini Mills Vs. Union of India & Ors. and CCE, Pondicherry Vs. EID Parry (I) Ltd., the Tribunal granted a waiver of the entire duty amount, interest, and penalty, staying its recovery during the appeal process.

In conclusion, the Tribunal, per P.K. Das, ruled in favor of the applicant, granting a waiver of pre-deposit of the duty amount, interest, and penalty based on the decisions of the Hon'ble High Courts, thereby allowing the stay application.