2022 (5) TMI 1303 - AT - Central Excise

CENVAT Credit - Dutiable as well as exempt goods - Bagasse and Press Mud - non-maintenance of separate accounts for input services used on manufacture of goods chargeable to duty and exempted goods - HELD THAT - As could be noticed in the Appellant s own case pertaining to the previous period reference has been made to the Hon ble Allahabad High Court s judgment striking down the amended Rules 6 and quashing Revenue s Circular dated 25.04.2016. It can also be noticed from the judgment of in M/S VIKAS SSK LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE SERVICE TAX AURANGABAD 2022 (1) TMI 1251 - CESTAT MUMBAI that Hon ble Allahabad High Court had even observed that the judgment of Hon ble Supreme Court in UNION OF INDIA VERSUS DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT still holds the field even after the insertation of explanation that was further explained through Circular dated 25.04.2016. This appeal for the period from February 2016 to June 2017 relates to post-amended period but judicial decisions is consistent in this aspect that Bagasse and Press Mud are non-excisable agricultural products to which Rules 6(3)(i) would not be applicable - Appeal allowed.

Summary

Issues:
Confirmation of demand against clearance of Bagasse and Press Mud without following Rules 6(3)(i) of the CENVAT Credit Rules, 2004.

Analysis:
The case involved the confirmation of demand against the clearance of Bagasse and Press Mud without following Rule 6(3)(i) of the CENVAT Credit Rules, 2004. The Appellant, a manufacturer of Sugar and Molasses, was availing Cenvat Credits on inputs, capital goods, and input services. The Department noticed that the Appellant was not maintaining separate records for dutiable goods (Sugar, Molasses) and exempted goods (Bagasse, Press Mud), despite using common inputs and services. The Department demanded the reversal of an amount equal to 6% of the value of exempted goods as per Rule 6(3) of the CCR, 2004. The demand, including interest and penalty, was confirmed at the adjudication and Commissioner (Appeals) levels.

During the hearing, the Appellant's Counsel referred to previous Tribunal decisions and a judgment of the Hon'ble Allahabad High Court, arguing that Bagasse and Press Mud should not be subject to Rule 6(3)(i) as they are non-excisable goods. The Department's Authorized Representative supported the Commissioner (Appeals) order.

The Member (Judicial) analyzed the case record, relevant law provisions, and case laws. Referring to previous decisions, the Member noted that judicial precedent established that Bagasse and Press Mud are non-excisable agricultural products not subject to Rule 6(3)(i). The Member upheld the Appellant's appeal, setting aside the Commissioner of GST & Central Excise (Appeals) order.

In conclusion, the Tribunal allowed the appeal, overturning the order of the Commissioner of GST & Central Excise (Appeals) and emphasizing the non-applicability of Rule 6(3)(i) to Bagasse and Press Mud based on judicial precedents and legal interpretations.