2019 (7) TMI 631 - AT - Central Excise

Taxability/Excisability - Waste/by-product - press mud - demand of tax at the rate of 6% of the clearance value of Press Mud - HELD THAT - The issue squarely covered by the decision in the case of M/S. BANNARI AMMAN SUGARS LTD. VERSUS THE COMMISSIONER OF G.S.T. CENTRAL EXCISE, SALEM COMMISSIONERATE 2018 (11) TMI 1449 - CESTAT CHENNAI where it was held that from a bare reading of Explanations 1 and 2 - press mud does not fit into the definition of exempted goods , as defined under Rule 2(d) of CCR because it is not an excisable good; nor can it be termed as a final product because it is not manufactured or produced from input or using input service. This is because it is a natural by-product which does not involve any effort nor is it the primary intention of a sugar manufacturer to intend to manufacture press mud. Demand do not sustain, as it is a natural by-product - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to demand raised on Press Mud taxability.

Analysis:
The appeal challenges the demand raised and confirmed by the First Appellate Authority on Press Mud tax. The main issue is the taxability of Press Mud in the hands of the assessee. The appellant's representative argued that the issue is settled in favor of the assessee based on previous decisions by the Chennai Bench of the CESTAT. The Authorized Representative for the Revenue supported the lower authorities' findings.

The Tribunal examined the contentions and reviewed the relevant documents and orders. Referring to a previous decision by the same Bench, the Tribunal noted that there is no duty liability on non-excisable goods cleared for a consideration before March 1, 2015. The Tribunal analyzed the applicability of Explanations 1 and 2 inserted with effect from March 1, 2015, which pertain to exempted goods or final products, including non-excisable goods cleared for consideration. The Tribunal referenced CBEC Circular No. 1027/15/2016 CX and various court interpretations to determine whether Press Mud qualifies as a non-excisable commodity or waste.

Based on the analysis, the Tribunal concluded that Press Mud does not fit the definition of "exempted goods" or "final products" under the CENVAT Credit Rules. It clarified that Press Mud, being a natural by-product without manufacturing effort, does not fall under the category of exempted goods or final products. Therefore, the Tribunal held that the amendment relied upon by the lower authorities does not cover waste like Press Mud, and the appellant is not liable to pay any duty. Consequently, the demand was set aside, and the appeal was allowed with consequential benefits as per the law.

In summary, the Tribunal found that the issue of taxability of Press Mud was previously settled in favor of the assessee based on relevant legal interpretations and precedents. The Tribunal determined that Press Mud does not qualify as an exempted good or final product under the CENVAT Credit Rules, leading to the decision to set aside the demand and allow the appeal with consequential benefits.