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2024 (3) TMI 177 - AT - Central ExciseCENVAT Credit - electricity sold being generated out of waste product viz. bagasse - demand of 6% of the value of the electricity generated and sold under Rule 6 of the Cenvat Credit Rules, 2004 - HELD THAT - The Hon ble Supreme Court in UNION OF INDIA VERSUS DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT , while examining the amendment to the definition of goods under Section 2(d) of the Central Excise Act, 1944 has held in the said case that Rule 6 of the Cenvat Credit Rules, 2004 cannot be made applicable to waste products i.e. bagasse. The said principle has been followed subsequently in UNION OF INDIA ORS. VERSUS M/S INDIAN SUCROSE LIMITED 2022 (7) TMI 353 - SC ORDER . Appeal allowed.
Issues involved: Interpretation of Section 2(d) of the Central Excise Act, 1944 regarding classification of bagasse as "goods" and applicability of Rule 6 of the Cenvat Credit Rules, 2004 to electricity generated from bagasse.
Issue 1: Classification of Bagasse as "goods" The appellant argued that bagasse, generated during sugar manufacture, is a waste product and does not qualify as "goods" under Section 2(d) of the Central Excise Act, 1944. Citing the Supreme Court judgment in Union of India Vs. DSCL Sugars Ltd., it was contended that bagasse does not fall within the definition of "manufacture" under Section 2(f) of the Act. The appellant also referred to a recent Supreme Court case, Union of India and others Vs. Indian Sucrose Ltd., where a Circular withdrawing a previous Circular was issued by the Board. The appellant emphasized that the 6% charge on electricity generated from bagasse cannot be sustained. The appellant further mentioned the reversal of cenvat credit related to inputs used in bagasse generation. Issue 2: Applicability of Rule 6 of the Cenvat Credit Rules, 2004 The key issue in this appeal was whether 6% of the value of electricity produced from bagasse should be subject to Rule 6 of the Cenvat Credit Rules, 2004. The Tribunal referred to the Supreme Court's observations in the DSCL case regarding the definition of "manufacture" under Section 2(f) of the Act. It was noted that for a process to amount to manufacture, it must fall within the definition provided in the Act. As bagasse is considered agricultural waste and not the result of any process specified in the relevant schedule, it does not qualify as "goods" under Section 2(d) of the Act. Therefore, Rule 6 of the Cenvat Credit Rules, 2004 cannot be applied to waste products like bagasse. This interpretation was consistent with the decisions in the DSCL case and Indian Sucrose Ltd. case, leading to the setting aside of the Commissioner's orders and allowing the appeals with consequential relief.
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