2002 (1) TMI 1335 - AT - Central Excise

Summary

Issues:
Classification of bagasse for duty purposes under CET, 1985; Applicability of Rule 57CC of CER 1944.

Analysis:
The appeals arose from orders by the Commissioner (Appeals) regarding the classification of bagasse under Chapter 17 of the Schedule to the CET, 1985. The Revenue contended that bagasse falls under heading 23.01 attracting a 'NIL' rate duty, while the Commissioner (Appeals) acknowledged common inputs used in manufacturing sugar, molasses, and bagasse but failed to consider Rule 57CC (New Rule 57AD) of CER 1944. The Revenue argued that bagasse is not a final product and Rule 57CC does not apply, emphasizing differences in input treatment compared to a cited case involving cut tobacco.

The learned Counsel for the respondents argued against the applicability of Rule 57CC, stating bagasse is not a final product and citing a judgment by the North Regional Bench of CEGAT. The judgment held that bagasse, as waste and residue, is chargeable to a nil rate of duty under heading 23.01 of the CET, 1985. Consequently, no demand for duty under Rule 57CC was justified, and the Tribunal set aside the lower authority's order, allowing the appeal.

Upon review, the Tribunal noted the Commissioner (Appeals) had correctly determined that bagasse is neither a final product nor a by-product in sugar and molasses manufacturing, chargeable to a nil rate of duty under heading 23.01 of the CET. The Tribunal analyzed Rule 57CC, concluding it does not apply when inputs are used in both exempted and dutiable goods, eliminating the need for separate accounts. Relying on the precedent set by the Rudra Bilas Kisan Sahakari Chini Mills Ltd. case, the Tribunal rejected the Revenue's appeal, affirming the orders in appeal.

In summary, the Tribunal upheld the classification of bagasse for duty purposes under the CET, 1985, and ruled against the applicability of Rule 57CC of CER 1944 based on the nature of bagasse as a residue rather than a final product in the sugar and molasses manufacturing process. The decision aligned with the precedent established in the Rudra Bilas Kisan Sahakari Chini Mills Ltd. case, emphasizing the nil rate of duty for bagasse and the absence of duty demands under Rule 57CC.