2021 (7) TMI 851 - AT - Central Excise

Reversal of CENVAT Credit - spent wash and press mud - waste/exempt goods - common inputs used in manufacture/clearance of spent wash and press mud in terms of Rule 6(2) and Rule 6(3) of Cenvat Credit Rules, 2004 - HELD THAT - The very same issue was considered by the Tribunal in the appellant s own case 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 press mud does not fit into the definition of exempted goods , as defined under 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. The demand cannot sustain and requires to be set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is liable to reverse Cenvat credit availed on common inputs used in the manufacture/clearance of spent wash and press mud due to the sale of the fertilizer produced from these waste products?

Analysis:
The appellant, engaged in manufacturing rectified spirit, neutral spirit, de-natured spirit, and fusel oil, faced a show-cause notice for allegedly using common inputs to manufacture spent wash and press mud, leading to a demand for reversing Cenvat credit under Rule 6(2) and Rule 6(3) of the Cenvat Credit Rules, 2004. The appellant processed spent wash and press mud to produce bio-compost and bio-super, which were sold. The department argued that the appellant must reverse the credit due to the sale of the new product. The original authority confirmed the demand, interest, and penalty, which was upheld by the Commissioner (Appeals), prompting the appeal before the Tribunal.

The appellant contended that spent wash and press mud were waste products, not consciously manufactured items. The Tribunal had previously ruled in the appellant's favor in a similar case, emphasizing that non-excisable goods like waste products should not be subject to duty reversal under Cenvat Credit Rules. The Tribunal highlighted that press mud did not fit the definition of exempted goods or final products, being a natural by-product without manufacturing intent. The Tribunal concluded that waste products like press mud should not be equated with by-products like bio-compost or Bagasse, and the appellant was not liable to pay any duty.

In light of the previous decision and the nature of press mud as a waste product, the Tribunal held that the demand for reversing Cenvat credit was not sustainable and set it aside, allowing the appeal with consequential relief. The judgment reiterated that waste products like press mud should not be treated in the same manner as manufactured goods, exempting the appellant from the duty reversal requirement.