2013 (10) TMI 796 - AT - Central Excise

Cenvat Credit Waiver of Pre-deposit - bagasse is generated as waste in the course of manufacture of sugar - Revenue is of the view that the applicant had not maintained separate record regarding inputs, therefore, the applicants are liable to pay 5% / 10% of the price of bagasse which was cleared without payment of duty Held that - Following Balrampur Chini Mills Ltd. vs. Union of India & others 2013 (1) TMI 525 - ALLAHABAD HIGH COURT - bagasse emerges in course of crushing of sugarcane which 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 - the order is set aside after waiving the pre-deposit of dues and the appeal is allowed Stay granted.

Summary

Issues:
- Waiver of pre-deposit of service tax, interest, and penalty
- Availing credit in respect of common inputs for dutiable and exempted goods
- Treatment of 'bagasse' as waste product in sugar manufacturing process

Analysis:

Issue 1: Waiver of pre-deposit of service tax, interest, and penalty
The appellant filed an application seeking waiver of pre-deposit of service tax amounting to Rs. 1,29,06,397, along with interest and penalty. The case's issue was previously settled in the matter of Shree Renuka Sugars Ltd. vs. Commissioner of Central Excise, Kolhapur. The Tribunal considered the appellant's request for waiver in light of the settled case and proceeded with the appeal hearing.

Issue 2: Availing credit in respect of common inputs for dutiable and exempted goods
The Revenue contended that the appellant availed credit for common inputs used in manufacturing final products cleared both with and without payment of duty. The lack of separate records for these inputs led to the Revenue's assertion that the appellant should pay a percentage of the price of 'bagasse' cleared without duty payment. The appellant, however, relied on previous decisions supporting manufacturers of sugar, emphasizing that the issue was settled in their favor.

Issue 3: Treatment of 'bagasse' as waste product in sugar manufacturing process
The Revenue argued that 'bagasse' emerged as a by-product during the crushing of sugarcane, similar to other by-products like acid sludge and cotton waste in different manufacturing processes. The appellant, on the other hand, highlighted the distinction between the cases cited by the Revenue, which pertained to different tax acts, and the present case governed by the Central Excise Act and CENVAT Credit Rules. The Tribunal referenced the decision in the case of Shree Renuka Sugars Ltd., where it was established that 'bagasse' was a waste product left after sugarcane crushing, essential for sugar and molasses production.

In conclusion, the Tribunal found that the issue at hand was settled by previous judgments favoring the appellant, particularly the decision in the case of Shree Renuka Sugars Ltd. The Tribunal differentiated the cited Supreme Court decision related to a different tax act, emphasizing the applicability of the precedent set in the specific circumstances of the present case. Consequently, the Tribunal set aside the demand, waived the pre-deposit of dues, and allowed the appeal, granting relief to the appellant.