2017 (11) TMI 229 - AT - Central Excise

CENVAT credit - input/input services - case of Revenue is that bagasse being a manufactured product and being removed on non-payment of duty, Appellants are required to reverse a particular percentage of credit availed by them on the inputs and input services as per the provisions of Rule 6 (3) of the CCR - Held that - the Apex Court in the case of UoI vs. DSCL Sugar Ltd. 2015 (10) TMI 566 - SUPREME COURT was considering an identical issue of coming to the existence of bagasse and subsequent use of them for further activity and held that bagasse is not a manufactured product and hence in Cenvat credit availed on the inputs or input services need not be reversed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeals against Order-in-Appeals, Cenvat credit reversal on bagasse removal.

Analysis:
The appeals were directed against specific Order-in-Appeals, and the issue involved in all three appeals was common, leading to a consolidated decision. The Appellants, engaged in manufacturing sugar-related products, were availing Cenvat credit benefits. The dispute arose when the revenue claimed that the Appellants must reverse a portion of the credit due to the removal of bagasse without duty payment during the production process. Both lower authorities upheld the demands, including interest and penalties.

The Appellants argued that previous tribunal decisions favored their position, citing specific cases and the judgment of the Apex Court in a similar context. The revenue contended that electricity generated and consumed internally did not require credit reversal, but any electricity supplied to the grid necessitated such action, referencing a precedent involving Maruti Suzuki Ltd. The Judicial Member carefully considered the arguments and found merit in the Appellants' position, noting consistency in tribunal decisions favoring them. Additionally, the Member highlighted the Apex Court's ruling in a related case, emphasizing that bagasse was not a manufactured product, thus supporting the Appellants' stance on credit reversal.

Ultimately, the Judicial Member relied on the recent Apex Court judgment, which directly addressed the issue at hand, to rule in favor of the Appellants. The Member distinguished the Maruti Udyog case cited by the revenue, emphasizing the relevance of the more recent DSCL Sugars judgment in deciding the matter conclusively. Consequently, the impugned orders were deemed unsustainable and set aside in favor of the Appellants. The decision was pronounced in open court on 21.09.2017.