2012 (8) TMI 836 - AT - Central Excise

Waiver of pre-deposit - Appellant is engaged in the manufacture of sugar from sugar cane and that, in the process of manufacture, bagasse is generated as waste - Held that - The bagasse generated in the course of manufacture of sugar by the first unit was disposed of by sale for a consideration and, therefore, (it is argued) the commodity should be deemed to be marketable and hence excisable. Yet another submission made by the learned Superintendent (AR) is that bagasse figures by name in the 1st Schedule to the Central Excise Tariff Act and hence should be held to be excisable. Marketability is not the only criterion for determining excisability. In the first instance, the commodity should be a manufactured product in terms of Section 2(f) of the Act. Bagasse is only a waste and not a product consciously manufactured by the appellant. The department has no case that bagasse was also included in the Registration Certificate issued to the appellant. As it was not a manufactured product, it could not be excisable and consequently could not be treated as exempted goods for purposes of Rule 6(3) of the CENVAT Credit Rules, 2004. Mere mention of bagasse in the First Schedule to the Central Excise Tariff Act is also of no consequence. - Following decision of Shakumbari Sugar & Allied Industries Ltd. 2003 (9) TMI 268 - CESTAT, NEW DELHI - Stay granted.

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery sought by the appellant.
2. Dispute regarding CENVAT credit denial and penalties for two appeal numbers.

Analysis:
1. The appellant, engaged in sugar manufacturing, sought waiver of pre-deposit and stay of recovery for adjudged dues. In the first appeal, bagasse generated as waste was disposed of by sale, while in the second appeal, it was used as fuel for electricity generation. The reversal of CENVAT credit of Rs. 3,35,806/- in the second appeal was not disputed. The appellant claimed a prima facie case based on a Tribunal decision upheld by the Supreme Court. The Superintendent argued that the decision might not hold after an explanation was inserted in the definition of "excisable goods" under the Central Excise Act.

2. The Tribunal analyzed the submissions and found no merit in the Superintendent's objections. The explanation cited by the Superintendent focused on marketability, stating that goods capable of being bought and sold are deemed marketable. The Superintendent argued that bagasse, listed in the Central Excise Tariff Act, should be considered excisable. However, marketability alone does not determine excisability. Bagasse, being waste and not a consciously manufactured product, did not qualify as excisable. The appellant's case against denial of CENVAT Credit was supported by a previous Tribunal decision upheld by the Apex Court. The appellant had reversed the credit before the show cause notice issuance, entitling them to waiver of pre-deposit and stay of recovery in both appeals. The order was made accordingly.