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2018 (10) TMI 1151 - AT - Central ExciseCENVAT Credit - by-product/waste - bagasse & press-mud arising out of manufacture of V P Sugar & molasses - Rule 6 (3) of CCR - whether the impugned waste invites the payment of excise duty in accordance of Rule 6 (3) of CCR, 2004? Held that - The Hon ble Apex Court in the case of Union of India vs. DSCL Sugar Ltd 2015 (10) TMI 566 - SUPREME COURT has held that products like bagasse and press-mud do not qualify the definition of Section 2F of CEA and as such are not being a manufacture. These are only an agricultural waste and residue which itself is not the result of any process and in the absence of manufacture, there cannot be any excise duty. The Hon ble Apex Court further clarified that since it is not a manufacture, Rule 6 of the Cenvat Credit Rules shall have no application. This rule was amended w.e.f. 01.03.2015 - however, since the main condition for Rule 6 is still, obligation of a manufacturer or producer of final products , it doesn t extend to by- products released during the process of manufacture of main product that too without involvement of any such activity, which may be called as manufacture. Thus, irrespective of the amendment, there arises no liability upon the appellant to pay the duty as demanded for the period w.e.f. September, 2014 to February, 2015, nor for the reversal of the credit as demanded for the period June, 2015 to March, 2016 - appeal allowed - decided in favor of appellant.
Issues:
1. Adjudication of two appeals against common Order-in-Appeal 2. Demand for Central Excise Duty on sale of bagasse and press-mud 3. Appellant's appeal before Commissioner (Appeals) dismissal 4. Interpretation of Rule 6(3) of Cenvat Credit Rules, 2004 5. Applicability of excise duty on waste products like bagasse and press-mud Analysis: 1. The judgment pertains to the disposal of two appeals against a common Order-in-Appeal. Despite two show cause notices and Orders-in-Original, a single Order-in-Appeal was issued for both appeals, consolidating the adjudication process. 2. The central issue revolved around the demand for Central Excise Duty on the sale of bagasse and press-mud by the appellants, who were also engaged in the manufacture of VP Sugar and molasses. The demand was raised under Rule 6(3)(i) of Cenvat Credit Rules, 2004, along with interest and penalties. 3. The appellant, aggrieved by the dismissal of their appeals by the Commissioner (Appeals), moved the present appeal. The legal representatives for both sides presented their arguments before the tribunal. 4. The crux of the matter lay in the interpretation of Rule 6(3) of the Cenvat Credit Rules, 2004, to determine whether waste products like bagasse and press-mud attract the payment of excise duty. The appellant cited relevant case laws to support their contention that such waste products do not qualify as manufactured goods, thereby exempting them from excise duty. 5. The tribunal, after considering the arguments and case laws presented, concluded that products like bagasse and press-mud do not fall under the definition of manufactured goods as per the Central Excise Act. The tribunal referenced the Union of India vs. DSCL Sugar Ltd. case to establish that such waste products are agricultural residues and not subject to excise duty. Therefore, the demand for duty and reversal of credit were deemed unjustified, leading to the allowance of both appeals. This comprehensive analysis of the judgment highlights the key issues addressed by the tribunal, focusing on the interpretation of relevant legal provisions and precedents to arrive at a just decision.
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