2020 (2) TMI 183 - AT - Central Excise

CENVAT credit - exempt goods/by-product - Bagasse/Pressmud - period April 2009 to October 2010 - applicability of rule 6 of CCR - 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 VERSUS DSCL SUGAR LTD. 2015 (10) TMI 566 - SUPREME COURT in favour of the assessee. Appeal allowed - decided in favor of assessee.

Summary

Issues:
Challenge to Order-in-Appeal regarding recovery of amount for clearing exempted goods without reversing CENVAT credit, Applicability of Rule 6(1) of CENVAT Credit Rules, 2004 to Press-mud and Boiler Ash, Interpretation of relevant legal provisions and precedents.

Analysis:
The appeal was filed challenging the Order-in-Appeal regarding the recovery of an amount for clearing exempted goods without reversing the CENVAT credit. The appellant, engaged in the manufacture of sugar and molasses, faced a show-cause notice for not reversing the amount required under Rule 6(3)(i) of the CENVAT Credit Rules, 2004. The demand was confirmed with interest and penalty, leading to the present appeal.

The appellant argued that the applicability of Rule 6 to Press-mud and Boiler Ash has been settled in their favor in previous cases, citing Athani Sugars Ltd. and other judgments. The Revenue reiterated the findings of the Commissioner. The Tribunal, after hearing both sides and perusing the records, found that the issue of applicability of Rule 6(1) to Press-mud and Boiler Ash had been settled in favor of the assessee based on the judgment of the Hon'ble Supreme Court in Union of India Vs. DSCL Sugar Ltd. The Tribunal referred to previous cases and observed that the amended definition of 'excisable goods' and 'manufacture' supported the assessee's argument.

Based on the precedents and legal provisions, the Tribunal concluded that even after the amendment to Rule 6 of CCR, 2004, 'bagasse' as a waste/byproduct falls outside the scope of the Rule. The impugned order was set aside, and the appeal was allowed with consequential relief as per law. The Department accepted the principle laid down in DSCL Limited's case through a circular, further supporting the Tribunal's decision to set aside the impugned order and allow the appeal.

In summary, the Tribunal's analysis focused on the interpretation of Rule 6(1) of CENVAT Credit Rules, 2004 in relation to Press-mud and Boiler Ash, relying on legal precedents and relevant legal provisions to determine that the appellants were not liable under the said rule. The decision was based on the settled law and the principle established by the Hon'ble Supreme Court, leading to the setting aside of the impugned order and allowing the appeal.