1999 (12) TMI 163 - AT - Central Excise

Summary

Issues:
1. Classification of bagasse as a final product for levy of central excise duty under Rule 57CC.
2. Applicability of Rule 57CC to goods generated without the use of inputs attracting Modvat credit.
3. Interpretation of marketability and its impact on the applicability of Rule 57CC.

Analysis:
1. The case involved a dispute regarding the classification of bagasse as a final product for the purpose of levying central excise duty under Rule 57CC. The department contended that bagasse should be treated as a final product and subjected to duty. The Commissioner (Appeals) upheld this view, considering bagasse as a marketable item under a separate Chapter heading. However, the Tribunal disagreed, emphasizing that bagasse was generated as a waste in the initial stage of the manufacturing process without the use of any inputs attracting Modvat credit.

2. The Tribunal examined the applicability of Rule 57CC to goods like bagasse that were produced without involving any inputs eligible for Modvat credit. It was established that the mechanical process of crushing sugarcane to produce bagasse did not utilize any inputs attracting the Modvat credit facility under Rule 57A. Therefore, the Tribunal concluded that Rule 57CC could not be invoked to levy central excise duty on bagasse in such circumstances.

3. The issue of marketability was crucial in determining the applicability of Rule 57CC. The Commissioner (Appeals) had considered bagasse marketable due to its sale in the market and classified it as a final product. However, the Tribunal disagreed, stating that marketability alone did not bring the goods under the purview of Rule 57CC. The Tribunal highlighted that the basic requirement for the application of Rule 57CC was not met in this case, as bagasse was generated without the use of any inputs attracting Modvat credit.

In conclusion, the Tribunal set aside the orders of the lower authorities, ruling in favor of the appellants. It held that bagasse, being a by-product generated without the use of any inputs attracting Modvat credit, should not be considered a final product subject to central excise duty under Rule 57CC. The judgment emphasized that the mere marketability of goods was insufficient to trigger the application of Rule 57CC, and the essential requirement for its invocation was the involvement of inputs eligible for Modvat credit.