2013 (2) TMI 489 - AT - Central Excise

Waiver of pre-deposit - Assessee is engaged in the manufacture of sugar and molasses - Bagasse, which is a residue, is cleared without payment of duty - Demand of duty in respect of the clearance of bagasse - Avail credit on common inputs and input service - Used in the manufacture of dutiable and exempted goods - Held that - Following the decision in case of INDIAN POTASH LTD. (2012 (12) TMI 347 - CESTAT, NEW DELHI) that bagasse emerges in course of crushing of sugarcane. It may be noted that crushing of sugarcane is necessary to extract cane sugar juice which in turn is processed for production of sugar and molasses. Bagasse is the waste product left after the crushing of sugarcane. Therefore, by no stretch of imagination it can be held that the assessee possibly could have maintained separate account for the inputs for production of sugar and molasses (excisable item) and bagasse. Moreover, neither the show cause notice nor the impugned order in appeal mentions as to which common Cenvat credit availed inputs have been used in manufacture of sugar and molasses (dutiable final products) and bagasse (exempted final product). Since bagasse emerges at sugarcane crushing stage, there is no possibility of any input-chemicals etc. having been used at that stage. In favour of assessee

Summary

Issues:
1. Waiver of pre-deposit of duty, interest, and penalty for the manufacture of sugar and molasses.
2. Demand of duty in respect of the clearance of bagasse due to availing credit on common inputs for dutiable and exempted goods.

Analysis:
The appellant, engaged in the manufacture of sugar and molasses, filed an application seeking waiver of pre-deposit of duty, interest, and penalty. The issue arose when the Revenue demanded duty for the clearance of bagasse, a residue cleared without payment of duty, on the grounds that the appellant availed credit on common inputs used in the manufacture of both dutiable and exempted goods. The Tribunal referred to a previous case, Indian Potash Ltd. vs CCE, where it was established that bagasse emerges as a waste product during the crushing of sugarcane, a necessary process for extracting cane sugar juice. The Tribunal concluded that maintaining separate accounts for inputs used in the production of sugar and molasses versus bagasse was not feasible. The Tribunal found no mention in the show cause notice or the impugned order regarding the specific inputs used in the manufacture of dutiable and exempted goods. Consequently, the Tribunal set aside the impugned order, citing that the appellant's argument had merit. The appeal and stay applications were allowed based on the Tribunal's decision, waiving the pre-deposit requirement.

In conclusion, the Tribunal's decision in the referenced case clarified the issue of availing credit on common inputs for dutiable and exempted goods in the context of manufacturing sugar and molasses. The appellant's plea for waiver of pre-deposit was granted, and the demand for duty in relation to the clearance of bagasse was dismissed based on the Tribunal's findings.