2014 (1) TMI 265 - AT - Central Excise

Separate accounts not maintained Demand under Rule 6(3) of CENVAT Credit Rules, 2004 Bagassee and press mud disposed without duty payment - Waiver of Pre-deposit Held that - Following Balrampur Chini Mills Ltd. & Others Versus Union of India and others 2013 (1) TMI 525 - ALLAHABAD HIGH COURT - bagasse which was generated in the course of manufacture of sugar was a waste and the same was not excisable - the press mud emerging during the manufacture of sugar is also not excisable - bagasse/press mud was not a manufactured product though marketable - the bagasse and press mud removed by the appellant without payment of duty during the material period are not to be considered as exempted goods for purposes of Rule 6(3) Prima facie pre-deposits waived till the disposal Stay granted.

Summary

Issues:
Impugned demand quantified without payment of duty on 'bagasse' and 'press mud' disposed of by the appellant, failure to maintain separate accounts for inputs, recent judgment of the Hon'ble Allahabad High Court regarding bagasse, Tribunal's view on press mud not being excisable, determination of bagasse and press mud as not 'exempted goods' under Rule 6(3) of CENVAT Credit Rules, 2004.

Analysis:
The judgment addresses the issue of the impugned demand quantified at 10%/5% of the sale price of 'bagasse' and 'press mud' disposed of by the appellant without payment of duty. It is noted that the appellant cleared their final products (sugar and molasses) on payment of duty. The impugned demand is based on Rule 6(3) of the CENVAT Credit Rules, 2004 due to the appellant's failure to maintain separate accounts for inputs used in the manufacture of dutiable products and the bagasse and press mud.

The judgment refers to a recent judgment of the Hon'ble Allahabad High Court regarding bagasse, where it was held that bagasse generated in the course of sugar manufacture is not excisable. Additionally, the Tribunal's consistent view on press mud emerging during sugar manufacture not being excisable is highlighted. The Tribunal's position is that bagasse and press mud are not manufactured products, though marketable, leading to the conclusion that they are not 'exempted goods' under Rule 6(3) of the CENVAT Credit Rules, 2004.

Based on the above analysis, the judgment concludes that the impugned demands are prima facie liable to be set aside. The stay application is allowed, leading to a waiver of predeposit and stay of recovery in respect of the adjudged dues. The decision is pronounced and dictated in open court, providing a clear resolution to the issues raised in the case.