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2019 (12) TMI 1125 - AT - Central ExciseCENVAT Credit - byproduct/ waste product - Bagasse/Pressmud - reversal of credit under Rule 6(3)(i) of the CENVAT Credit Rules 2004 - HELD THAT - The issue of applicability of Rule 6(1) of CENVAT Credit Rules 2004 to bagasse/pressmud which emerges during the course of manufacture of sugar and molasses has been settled taking note of the judgment of Hon ble Supreme Court in the case of Union of India Vs. DSCL Sugar Ltd. UNION OF INDIA VERSUS DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT in favour of the assessee. The principle laid down in DSCL Sugar Limited s case has been accepted by the Department by issuance of Circular No. 1027/15/2016-CX dated 25.04.2016. Appeal allowed - decided in favor of appellant.
Issues:
1. Applicability of Rule 6 of CENVAT Credit Rules, 2004 to bagasse/pressmud emerging as a byproduct/waste during the manufacture of sugar and molasses. 2. Interpretation of the judgment of Hon'ble Supreme Court in Union of India Vs. DSCL Sugar Ltd. 3. Impact of Circular No. 1027/15/2016-CX on the case. Issue 1: Applicability of Rule 6 of CENVAT Credit Rules, 2004 to bagasse/pressmud: The case involved challenges against two orders: Order-in Original No. 16/CEX/COMMR/KOP/2012 and Order-in-Appeal No. PII/RKS/112 to 130/2012. The appellant, engaged in sugar and molasses manufacturing, faced allegations of clearing exempted goods, namely Bagasse/Pressmud, without reversing the required amount under Rule 6(3)(i) of the CENVAT Credit Rules, 2004. The demand for recovery of amounts totaling over &8377;87 lakhs was confirmed with interest and penalty. The appellant contended that previous judgments favored them, citing cases like Athani Sugars Ltd. Vs. Commissioner of Central Excise and Shree Narmada Khand Udyog Vs. Commissioner of Central Excise. The Tribunal referred to the judgment of Hon'ble Supreme Court in Union of India Vs. DSCL Sugar Ltd. to settle the issue. It was observed that bagasse emerging as a waste/byproduct falls outside the scope of Rule 6 of the CENVAT Credit Rules, 2004, even after an amendment. The impugned order was set aside, and the appeal was allowed with consequential relief. Issue 2: Interpretation of the judgment of Hon'ble Supreme Court in Union of India Vs. DSCL Sugar Ltd.: The Tribunal analyzed the judgment of the Hon'ble Supreme Court in Union of India Vs. DSCL Sugar Ltd., where it was highlighted that bagasse, being an agricultural waste and residue not resulting from any specific process, does not attract excise duty. The Court emphasized that if an item is not a result of manufacturing, Rule 6 of the CENVAT Credit Rules, 2004, does not apply. This interpretation led to the conclusion that bagasse, as a byproduct, falls outside the purview of the Rule, supporting the appellant's case. Issue 3: Impact of Circular No. 1027/15/2016-CX on the case: The Department accepted the principle laid down in the DSCL Sugar Limited case by issuing Circular No. 1027/15/2016-CX, aligning with the Supreme Court's interpretation. This circular further supported the appellant's position, leading to the setting aside of the impugned order and allowing the appeal with any consequential relief as per the law. The Tribunal's decision was in line with the circular and the legal precedents established by the Hon'ble Supreme Court, providing relief to the appellant in the matter of applicability of Rule 6 to bagasse/pressmud as emerging byproduct/waste during the manufacturing process of sugar and molasses. This detailed analysis of the judgment from the Appellate Tribunal CESTAT MUMBAI provides a comprehensive understanding of the issues, legal interpretations, and the final decision rendered by the Tribunal in favor of the appellant.
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