2022 (1) TMI 1251 - AT - Central Excise

CENVAT Credit - bagasse and pressmud - dutiable as well as exempt goods - Explanation 1 2 in Rule 6(1) of CENVAT Credit Rules, 2004 - HELD THAT - Both the show-cause notices which were adjudicated upon have dealt with the general provisions of CENVAT Credit Rules, 2004 and not the newly inserted Explanation 1 2 in Rule 6(1) that came into effect from 01.03.2015. As has been argued by the learned Counsel for the appellant in M/S BALRAMPUR CHINI MILLS LTD. THROUGH ITS GENERAL MANAGER VERSUS UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF REVENUE 2019 (5) TMI 972 - ALLAHABAD HIGH COURT , Hon'ble Allahabad High Court had given a clear finding to the effect that the ratio laid down in the judgment of Hon'ble Supreme Court in UNION OF INDIA VERSUS DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT case still holds the field after the insertion of explanation that was further explained through the Circular date 25.04.2016 (after the disputed period) treating bagasse to be none excisable goods, for which the Circular was quashed that was issued to explain the insertion of Exception 1 2 in Rule 6(1) w.e.f. 01.03.2015. It is needless to mention here that pressmud is a similar by-product and treated at par with bagasse, to which effect several decisions including the one reported in SAHAKAR MAHARSHI BHAUSAHEB THORAT SSK LTD VERSUS C.C.E. S.T. NASIK 2020 (2) TMI 140 - CESTAT MUMBAI has been cited by the learned Counsel for the appellant. Appeal allowed.

Summary

Issues:
1. Duty demand on bagasse and pressmud sale value.
2. Applicability of Rule 6 of CENVAT Credit Rules, 2004.
3. Interpretation of judicial precedents.
4. Effect of Explanation 1 & 2 in Rule 6(1) post 01.03.2015.
5. Validity of Commissioner's Order-in-Appeal.

Analysis:

Issue 1 - Duty demand on bagasse and pressmud sale value:
The Adjudicating Authority confirmed a duty demand against the appellant based on the sale value of bagasse and pressmud, along with interest and penalty. The Commissioner (Appeals) upheld this decision, leading to the appeal before the Tribunal.

Issue 2 - Applicability of Rule 6 of CENVAT Credit Rules, 2004:
The Tribunal analyzed the period in question (December 2015 to March 2016) and referred to the judgment in the case of Union of India & Others Vs. M/s. DSCL Sugar Ltd. & Others. The insertion of Explanation 1 & 2 in Rule 6(1) of CENVAT Credit Rules, 2004 was discussed, which enabled the Department to raise a demand against the appellant engaged in sugar and molasses manufacturing.

Issue 3 - Interpretation of judicial precedents:
The Commissioner (Appeals) failed to distinguish the DSCL Sugar Ltd. case and indirectly disregarded its importance by not considering the judgment in the Jai Bhagwan Oil & Flour Mill Ltd. case. The Tribunal highlighted the binding nature of Supreme Court judgments and the definition of terms like "manufacture" and "excisable goods" discussed in the DSCL Sugar Ltd. case.

Issue 4 - Effect of Explanation 1 & 2 in Rule 6(1) post 01.03.2015:
The Tribunal noted that the show-cause notices did not address the newly inserted Explanation 1 & 2 in Rule 6(1) effective from 01.03.2015. Reference was made to the Allahabad High Court's decision and circulars treating bagasse as non-excisable goods even after the insertion of the explanation.

Issue 5 - Validity of Commissioner's Order-in-Appeal:
Considering various legal arguments and precedents, the Tribunal allowed the appeals and set aside the Commissioner's Order-in-Appeal dated 10.01.2019, emphasizing the legal interpretations and the applicability of relevant rules and judgments.

This detailed analysis of the judgment showcases the thorough consideration of legal provisions, precedents, and interpretations by the Tribunal in resolving the issues raised in the appeals related to duty demand on bagasse and pressmud sale value under the CENVAT Credit Rules.