2013 (6) TMI 443 - HC - Central Excise

Duty on bagasse - wastage - held that - It has been settled by the Division Bench of this Court in Balrampur Chini Mills Ltd. vs. Union of India and others 2013 (1) TMI 525 - ALLAHABAD HIGH COURT by order dated 18.05.2012 that bagasse is a waste product and no more duty will be imposed over it. - Decided in favor of assessee

Summary

Issues:
Controversy over imposition of duty on bagasse, interpretation of Central Excise Tariff Act, validity of Circulars issued by authorities, applicability of Rule 6 of CENVAT Credit, liability of petitioners for penalty and interest.

Analysis:
The judgment addressed the controversy surrounding the imposition of duty on bagasse, a byproduct of sugarcane, under the Central Excise Tariff Act. The Division Bench of the Court referred to a previous decision in Balrampur Chini Mills Ltd. vs. Union of India, where it was established that bagasse is considered an agricultural waste and not subject to duty as it does not involve any manufacturing activity. The judgment emphasized that adding an explanation under Section 2(d) of the Central Excise Act does not alter the classification of bagasse as a non-dutiable item. The Circulars issued by the Chief Commissioner and Central Board of Excise and Customs, which formed the basis for imposing demands, were deemed invalid in light of the previous ruling.

The Court also examined the applicability of Rule 6 of the CENVAT Credit, which requires payment for exempted final products based on the sale value. It was clarified that since the petitioners were not liable to duty for the sale of bagasse, no penalty or interest could be charged from them. Consequently, the petitioners who had paid duty and interest under protest were entitled to a refund of the deposited amount. The judgment highlighted the need to quash the impugned Circulars and demand notices issued by the authorities, ensuring the return of deposited amounts to eligible petitioners within a specified timeframe.

In conclusion, the Court found no justification to revisit the settled controversy regarding the duty on bagasse, as established by the previous judgment. The appeals were deemed meritless and dismissed accordingly. The Tribunal's decision was upheld as lawful and proper, affirming the dismissal of both appeals.