2014 (7) TMI 318 - AT - Central Excise

CENVAT Credit - Clearance of bagasse generated during the processing of sugarcane for manufacture of sugar without payment of duty - Non maintenance of separate accounts - Held that - Appellant has been taking the plea before both the lower authorities that Bagasse is a waste generated during the crushing of sugarcane and has been thought to be marketable, the same cannot be considered as a manufactured product in order to attract the provisions of Rule 6 (3) of the Cenvat Credit Rules. - identical issues have been coming up all over the country and this Tribunal in the case of Bannari Amman Sugars Ltd. Vs Commissioner of Central Excise Salem - 2013 (12) TMI 1036 - CESTAT CHENNAI , Delta Sugars Ltd. Vs Commissioner of Central Excise Guntur - 2013 (10) TMI 796 - CESTAT BANGALORE have been taking a view that Bagasse is not a manufactured product and hence the provisions of Rule 6 (3) will not be applicable. We find that the based upon these decisions, the CBEC had issued a Circular No.904/24/2009-CX dt. 28.10.2009 wherein it was directed to the field formations that the amount equivalent to 5% or 10% of the value of Bagasse needs to be demanded from the assessee. The said circular is struck down by the Hon ble Allahabad High Court in the case of Balrampur Chini Mills Ltd. & Others Vs Union of India - 2013 (1) TMI 525 - ALLAHABAD HIGH COURT - Decided in favour of assessee.

Summary

Issues:
Stay petition for waiver of predeposit of an amount confirmed as 5% or 10% of the value of exempted goods cleared by the appellant after utilizing cenvat credit.

Analysis:
The judgment pertains to a stay petition filed for the waiver of predeposit regarding the clearance of exempted goods by the appellant after using cenvat credit. The issue revolves around the classification of 'Bagasse,' a product cleared without duty payment, generated during the processing of sugarcane for sugar manufacture. The Revenue contends 'Bagasse' is an exempted product, necessitating payment of 5% or 10% of the exempted value due to the lack of separate accounts for dutiable and exempted product inputs.

The appellant argues that 'Bagasse' is a waste product from sugarcane crushing, not a manufactured product under Rule 6(3) of the Cenvat Credit Rules. The Tribunal references similar cases like Bannari Amman Sugars Ltd. Vs Commissioner of Central Excise Salem and Delta Sugars Ltd. Vs Commissioner of Central Excise Guntur, which held 'Bagasse' is not a manufactured product. The CBEC circular demanding 5% or 10% value of 'Bagasse' was invalidated by the Allahabad High Court in Balrampur Chini Mills Ltd. & Others Vs Union of India. Relying on these precedents, the Tribunal concludes the impugned order is unsustainable.

Ultimately, the Tribunal sets aside the impugned order, allowing the appeal and disposing of the stay application. The decision is based on the judicial pronouncements and precedents cited, emphasizing that 'Bagasse' is not a manufactured product, rendering the circular demanding payment invalid.