2019 (7) TMI 200 - AT - Central Excise

CENVAT Credit - common inputs/input services which are used in the manufacture of dutiable goods and exempted product - recovery of an amount equal to 6% of the clearance value of the exempted goods - HELD THAT - Hon ble Supreme Court in UNION OF INDIA VERSUS DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT , held that Bagasse emerged during the course of manufacture of sugar and molasses as a by-product cannot be subjected to the provisions of Rule 6 of CENVAT Credit Rules, 2004. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availment of CENVAT Credit on inputs used in the manufacture of exempted goods.
2. Interpretation of Rule 6(1) of CENVAT Credit Rules, 2004.
3. Applicability of judgments in similar cases to the present scenario.

Analysis:
1. The case involved the Appellants engaged in sugar manufacturing, where Bagasse and Press mud emerged as by-products. A Show Cause Notice was issued for availing CENVAT Credit on inputs used in the manufacture of exempted goods. The Adjudicating authority confirmed a demand, which was partly allowed by the learned Commissioner (Appeals), leading to the present appeal.

2. The Appellants argued that 'Press mud' being a waste product/by-product in the manufacture of dutiable goods, is not covered under Rule 6(1) of CENVAT Credit Rules, 2004. They cited the judgment of the Hon'ble Supreme Court in UOI Vs DSCL Sugar Limited. The learned A.R. reiterated the findings of the learned Commissioner (Appeals).

3. The Tribunal referred to its previous judgments in similar cases, such as Athani Sugars Ltd Vs Commissioner, CGST, Kolhapur and Shree Narmada Khand Udyog Vs CCE. Following the precedent set by the Hon'ble Supreme Court in DSCL Sugar Limited's case, the Tribunal held that 'Bagasse' as a by-product cannot be subjected to Rule 6 of CENVAT Credit Rules, 2004. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per law.