2015 (9) TMI 1022 - AT - Central Excise

Denial of exemption claim - whether the bi-products Baggase and Press Mud arising during the process of manufacture of excisable goods i.e. Sugar should be considered as exempted goods for the purpose of reversing of an amount equivalent to 5% or 10% under the provisions of Rule 6(3) OF CENVAT Credit Rules, 2004 - Held that - It is observed that in the case of Balrampur Chinni Mills Vs UoI 2013 (1) TMI 525 - ALLAHABAD HIGH COURT , Hon ble Allahabad High Court, after considering the Apex Court decision 2010 (7) TMI 974 - SUPREME COURT held that there was no manufacturing involved when the sugar is crushed leading to generation of Bagasse. - Similarly, in the case of Hindalco Industries Vs UoI 2014 (12) TMI 657 - BOMBAY HIGH COURT also Bombay High Court set aside the CBEC Circular No.904/24/2009-CX, dt.28.10.2009 and Circular No.941/02/2011-CX dt.14.02.2011. - reliance placed by First Appellate Authority on CBEC Circular, dt.14.02.2011 is not sustainable and is required to be set aside - Decided in favour of assessee.

Summary

Issues involved:
1. Whether by-products Baggase and Press Mud arising during the manufacture of excisable goods should be considered as exempted goods for the purpose of reversing an amount under Rule 6(3) of CENVAT Credit Rules, 2004.

Analysis:
The appeal was filed against OIA No. CCEA-SRT-I/SSP-370/2012-13/U/S 35A(3)(Final Order), dt.25.02.13, questioning the classification of by-products Baggase and Press Mud as exempted goods for the purpose of reversing an amount under Rule 6(3) of CENVAT Credit Rules, 2004. The Appellant did not appear during the hearing, and it was noted that they also did not appear during a previous occasion for a stay application. The Revenue relied on Circulars issued by CBEC to defend the order passed by the First Appellate Authority.

The Tribunal considered the case law, specifically the decision of the Hon'ble Allahabad High Court in the case of Balrampur Chinni Mills Vs UoI [2014 (300) ELT 372 (All.)], which clarified that Bagasse, a by-product of sugar manufacturing, does not involve manufacturing activity and is not considered as exempted goods. The High Court emphasized that Bagasse is an agricultural waste and cannot be classified as a dutiable item, nullifying the impact of Circulars issued by the Chief Commissioner. Additionally, the Tribunal mentioned the case of Hindalco Industries Vs UoI [2015 (315) ELT 10 (Guj.)], where the Bombay High Court set aside relevant CBEC Circulars.

Based on the settled legal position established by the case law, the Tribunal concluded that the reliance on CBEC Circulars by the First Appellate Authority was not sustainable. Consequently, the appeal was allowed, and the Order-in-Appeal dated 25.2.2013 issued by the First Appellate Authority was set aside. The judgment was pronounced in court, and the appeal was decided in favor of the Appellant.