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2019 (7) TMI 1184 - AT - Service TaxCENVAT Credit - waste/by-product - Bagasse - inputs/input services which are used in the manufacture of dutiable goods and exempted product - Rule 6(1) of CENVAT Credit Rules, 2004 - HELD THAT - The ratio laid down by the Hon ble Supreme Court in UNION OF INDIA VERSUS DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT , held that Bagasse emerged during the course of manufacture of sugar and molasses as a by-product cannot be subjected to the provisions of Rule 6 of CENVAT Credit Rules, 2004. Appeal allowed - decided in favor of appellant.
Issues: Availment of CENVAT Credit on inputs used in the manufacture of exempted goods - Applicability of Rule 6(1) of CENVAT Credit Rules, 2004 - Interpretation of 'Bagasse' as a waste product/by-product - Reference to relevant case law.
Analysis: The judgment addresses the issue of the appellant availing CENVAT Credit on inputs used in the manufacture of exempted goods, specifically focusing on the interpretation of 'Bagasse' as a waste product/by-product. The appellant, engaged in sugar manufacturing, cleared Bagasse as waste/residue during the production process. Show Cause Notices were issued for recovery of amounts related to CENVAT Credit availed on inputs used in the manufacture of dutiable goods and exempted product 'Bagasse'. The demand was confirmed with interest and penalty, leading to the appeal before the Tribunal. In their grounds of appeal, the appellant argued that Bagasse, being a waste product/by-product in the manufacture of dutiable goods, should not fall under Rule 6(1) of CENVAT Credit Rules, 2004. They cited the judgment of the Hon'ble Supreme Court in the case of UOI Vs DSCL Sugar Limited to support their contention. The learned A.R. representing the Revenue reiterated the findings of the Commissioner (Appeals) during the proceedings. The Tribunal, after considering the submissions and records, referred to the case law precedent set by the Tribunal in the case of Athani Sugars Ltd Vs Commissioner, CGST, Kolhapur and Shree Narmada Khand Udyog Vs CCE. These cases followed the judgment of the Hon'ble Supreme Court in DSCL Sugar Limited's case, establishing that Bagasse, as a by-product emerging during the sugar and molasses manufacturing process, should not be subjected to the provisions of Rule 6 of CENVAT Credit Rules, 2004. Consequently, the Tribunal found no merit in the impugned order and set it aside, allowing the appeal with any consequential relief as per law. In conclusion, the judgment clarifies the interpretation of 'Bagasse' as a waste product/by-product in the context of availing CENVAT Credit, aligning with established case law and setting aside the demand imposed on the appellant for availing such credit on inputs used in the manufacture of exempted goods.
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