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2013 (9) TMI 939 - HC - Central ExciseCenvat Credit - Duty under Protest Refund of Duty- waste bagasse emerged - Applicability of Rule 6 for production of exempted and non-dutiable goods Held that - Following Balrampur Chini Mills Ltd. vs. Union of India and others 2013 (1) TMI 525 - ALLAHABAD HIGH COURT - Bagasse is a waste product and no more duty will be imposed over it - Bagasse and press mud are not final products of the manufacturer Bagasse is classified under sub-heading 2303 20 00 of Central Excise Tariff Act. In the notice, it has been mentioned that as per Rule 6 of the CENVAT Credit is availed on the inputs which are used in the manufacture of both dutiable and final products, then an amount equal to 10% (upto 6th July, 2009) or 5% (w.e.f. 7.7.2009) of the sale value of exempted final products is required to be paid - Therefore, neither the penalty nor the interest can be charged from the petitioners, in view of the fact that the petitioners are not liable to duty either by payment or by reversal in respect of bagasse sold by the petitioner - As the petitioners have paid the entire duty and interest under protest, the entire deposited amount shall returned to them Decided in favour of Assessee.
Issues:
Interpretation of bagasse as a waste product for exemption from duty under Central Excise Rules. Analysis: The judgment in question revolves around the classification of bagasse as a waste product and its exemption from duty under the Central Excise Rules. The Division Bench of the Allahabad High Court settled the controversy by referring to previous cases and legal precedents. It was established that bagasse, generated during the crushing of sugarcane, is considered a residue or waste and not a final manufactured product. The court cited the case of CCE v. Shakumbhari Sugar & Allied Industries Limited to support this position. It was emphasized that bagasse, despite being marketable, does not undergo manufacturing activity to warrant duty imposition. The court also highlighted that bagasse falls under sub-heading 2303 20 00 of the Central Excise Tariff Act. Furthermore, the judgment referenced cases such as Central Excise Commissioner v. Mahalakshmi Sugar Mills and Commissioner Central Excise, Meerut v. U. P. State Sugar Corporation to reinforce the notion that bagasse and press mud are not final products of the manufacturer. The court rejected the imposition of duty on bagasse and press mud cleared by a sugar company. The circulars issued by the Chief Commissioner of Central Excise and the Central Board of Excise and Customs, which formed the basis for demanding duty, were deemed liable to be quashed based on the established legal principles. In the impugned notice, it was highlighted that CENVAT Credit availed on inputs used in the manufacture of both dutiable and final products necessitates a payment equivalent to a percentage of the sale value of exempted final products. However, since bagasse was not subject to duty, the petitioners were not liable for penalty or interest. The court directed the return of the entire deposited amount to the petitioners, who had paid duty and interest under protest. Conclusively, the court allowed all the writ petitions, quashing the circulars and demand notices in question. The judgment reiterated the non-dutiable nature of bagasse as an agricultural waste and emphasized the need to return the deposited amounts to the petitioners. The dismissal of the appeal was justified based on the settled nature of the controversy and the absence of impropriety in the tribunal's decision.
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