2017 (9) TMI 1545 - AT - Central Excise

CENVAT credit - manufacture of dutiable and exempt goods - non-maintenance of separate records - Held that - the issue is no longer res Integra and has been settled by the judgment of Hon ble High Court of Allahabad in the case of Balrampur Chini Mills Limited vs. CCE, Allahabad 2013 (1) TMI 525 - ALLAHABAD HIGH COURT which held that bagasse arising in the course of manufacture of sugar cannot be treated as excisable goods, it continues to remain waste and it does not become manufacture of final product for the purposes of rule 6 of CCR, 2004 - Press Mud is also a waste product similarly emerging during the manufacture of sugar, molasses, therefore the same ratio will also be applicable to press mud - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Contravention of Rule 6 of Cenvat Credit Rules 2004 by availing cenvat credit on common inputs used in manufacturing both dutiable and exempted goods without maintaining separate accounts.

Analysis:
1. The case involved Nizam Deccan Sugars Limited, manufacturers of cane sugar, cane molasses, bagasse, and press mud. The appellants were availing cenvat credit on common inputs without maintaining separate accounts for dutiable and exempted goods, leading to a show cause notice for contravention of Rule 6 of Cenvat Credit Rules 2004. The original authority confirmed demands and imposed penalties, which were appealed by both the appellants and the Department.

2. During the hearing, no one appeared for the appellant, while the Department supported the impugned order. The issue was whether the appellant contravened Rule 6 of Cenvat Credit Rules 2004 by availing cenvat credit on common inputs without maintaining separate accounts for dutiable and exempted goods.

3. The Tribunal referred to a judgment of the Hon'ble High Court of Allahabad in the case of Balrampur Chini Mills Limited vs. CCE, Allahabad, which held that bagasse arising in the course of sugar manufacture cannot be treated as excisable goods. The judgment was upheld by the Hon'ble Supreme Court in the case of Union of India vs. DSCL Sugar Limited, where it was clarified that bagasse and press mud are agricultural waste and residue, not resulting from any manufacturing process, thus not subject to Rule 6 of Cenvat Credit Rules 2004.

4. Following the Supreme Court's decision, the Tribunal held that the impugned order confirming demands and penalties could not be sustained. The judgment established that bagasse and press mud are agricultural waste, not subject to excise duty, and therefore, the appeal was allowed.

5. The Tribunal concluded by setting aside the impugned order and allowing the appeal based on the legal precedent established by the Hon'ble Supreme Court regarding the non-applicability of Rule 6 of Cenvat Credit Rules 2004 to bagasse and press mud as agricultural waste products.