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TMI Blog2013 (1) TMI 525X X X X Extracts X X X X X X X X Extracts X X X X ..... d an entry in Schedule to the Central Excise Tariff, but it does not become a final product merely on such entry. As some of the petitioners deposited the entire duty and interest under protest, it should be returned to them, within a maximum period of four weeks, from the date of presentation of a certified copy of this order. - Decided in favor of assessee. - Civil Misc. Writ Petition No. 11791 (M/B) of 2010, 11774 (M/B) of 2011, 1129 (M/B) of 2011, 3461 (M/B) of 2011, 3076 (M/B) of 2011, 3069 (M/B) of 2011, 1896 (M/B) of 2011, 1815 (M/B) of 2012, 1810 (M/B) of 2012, 1804 (M/B) of 2012, - - - Dated:- 18-5-2012 - Shri Rajiv Sharma, And Shri Vinay Kumar Mathur, JJ. In compliance of the order dated 7.5.2012, Sri A.K. Misra, Chief Commissioner is present and he states that the Circular dated 3.10.2009 was issued by his predecessor and he retired on attaining the age of superannuation. At the outset, it has been submitted by the learned Counsel for the parties that since the question involved in the above captioned writ petitions is different from the question involved in writ petition Nos.4477 of 2011 (MB), 1069 (MB) of 2012, 1802 of 2012 (MB), 1816 of 2012 (M/B), 3923 (MB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er concerns of the petitioner. The 'bagasse' is classified under sub-heading 2303 20 00 of Central Excise Tariff Act, 1985 (5 of 198) as 'Beet-Pulp', 'bagasse' and other waste of sugar manufacture' with NIL rate of duty. The petitioner is using lubricant and grease to run the mills for crushing cane and extraction of juice in the process of which 'Bagasse' emerges as residue/waste after extracting juice from sugarcane. The petitioner transports about 65% cane from cane centres and service tax is being paid by the petitioner on the transportation of the cane and for which the CENVAT credit is taken. Service tax is also paid on repair and maintenance to contractors and also to the various other services for which the credit is taken by the petitioner. The petitioner is availing credit of Central Excise Duty paid on inputs and capital goods as provided under Cenvat Credit Rules, 2004 for further payment of Central Excise Duty on final products, viz., Sugar and Molasses. Learned counsel for the petitioners submits that Rule 6 (1) of CENVAT Credit Rules is not applicable in the present case. According to him, Rule 6 (1) provides that CENVAT Credit shall not allow on such quantity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold for a consideration and is actually being bought and sold in the market as Energy input, i.e. as a burning agent in boilers and even for ordinary consumption as an energy input. The bagasse is also being used in the manufacture of paper and paperboard and for that reason, an exemption has been granted by the Government vide notification No.04/2006 dated 7.12.2008, with an idea to enhance the consumption of renewable energy input as 'bagasse' in the manufacturer of paper and paperboard. Therefore, it cannot be said that 'bagasse' is a refuge or dirt or porridge and is not a manufactured product. Elaborating his arguments, Mr. Chauhan has further submitted that in terms of the judgment of Hon'ble Supreme Court, in the year 2005-06, the commodity, bagasse is not a manufactured product. However, consequent upon the amendment brought by the Government in the newly enacted andenlarged Section 2 (d) of the Central Excise Act, 1944, vide the Finance Bill, 2008, 'bagasse' got covered under the definition of excisable goods w.e.f 10.5.2008. In view of the amendment, the Apex Body, i.e. Department of Revenue, Central Board of Excise and Customs issued Circular dated 28.10.2009 clarify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit has been taken on the inputs which are used for manufacture of dutiable and exempted goods, then in terms of Rule 6 of the Cenvat Credit Rules, 2004, the assessee is required to reverse the proportionate credit or pay 5% amount. In turn, the Chief Commissioner, Customs, Central Excise and Service Tax, issued a Circular dated 3.10.09, requiring the authorities to take action under Rule 6 of the Cenvat Credit Rules, 2004. The petitioner has deposited the amount alongwith the interest under protest, but now the petitioner has been served with a show cause notice, requiring it to show cause as to why the amount deposited be not appropriated and why the penalty be not imposed upon it. Sri Rajesh Singh Chauhan, appearing for the respondents, says that it is a show cause notice alone, and therefore, whatever points are being raised by the petitioner, the same can be raised there. In response, learned counsel for the petitioner submits that once the Circular has been issued by the Board and in consequence whereof, the Chief Commissioner, Customs, Central Excise and Service Tax, has also issued another Circular, holding that the bagasse is covered by Rule 6 of the Cenvat Credit Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notices impugned dated 24.9.2010 and 27.9.2010, till the next date of listing. List this matter in the week commencing 20.12.2010." A careful perusal of the aforesaid order, it reveals that after considering the maintainability of the writ petition, the interim order has been passed. Therefore, there is no necessity to delve into the maintainability of the writ petition. Rule 6 of CENVAT Credit Rules provides for obligation of manufacturer, who manufactures dutiable goods and who manufactures exempted goods. Rules 6 (1), 6(2) and 6(3) of the aforesaid Rules, which are relevant, are reproduced as under:- Rule 6: Obligation of manufacturer of dutiable and exempted goods and provider of taxable and exempted services - (1) The CENVAT Credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for provision of exempted services, except in the circumstances mentioned in sub-rule (2). Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Tariff Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case 'sugar' is the final product and molasses is an intermediary product or by-product, therefore, for applicability of Rule 6, the manufacture of dutiable goods and manufacture of exempted goods are conditions precedent. Since waste is never manufactured and it only emerges in the process of manufacture of final product, Rule is not applicable to bagasse which is admittedly a waste, which emerges from the crushing of sugarcane for the manufacture of final product, namely, sugar. The law is well settled that 'bagasse' generated from the crushing of the sugarcane is neither manufactured goods nor manufactured final product, but it is a residue/waste. The Apex Court while dismissing the Civil Appeal preferred by the department in the case of CCE v. Shakumbhari Sugar Allied Industries Limited [2005 (189) ELT 62 (SC)], uphold the findings recorded by the Tribunal in the case of CCE v. Shakumbhari Sugar and Allied Industries Limited, whereby it has been held that the 'Bagasse' obtained during the course of manufacture of sugar out of sugarcane may find an entry in Schedule to the Central Excise Tariff, but it does not become a final product merely on such entry. Such 'bagasse' is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 2 (d) of Central Excise Act inasmuch as it does not cease to be waste and it does not become a manufactured final product for the purposes of Rule 6 of CENVAT Credit Rules. Rule 6 of CENVAT Credit Rules, 2004 is equivalent and analogous to Rule 57CC of Central Excise Rules, which has been interpreted by the Bombay High Court in the case of Rallies India Ltd. v. Union of India [(2009) 233 ELT 301]. Para 2 of the judgment refers to Rule 57 CC which is now equivalent to Rule 6 of the CENVAT Credit Rules, 2004, which are in respect of both the period, as mentioned in paragraphs 13 and 14 of the judgment. Paragraphs 25, 26 and 28 refer to the waste which is not final product. Hence, neither Rule 57 CC nor Rule 6 (2) is applicable. In the case of Commissioner, Central Excise v. Gas Authority of India Ltd. [(2008) 232 ELT 7], Hon'ble Apex Court has held that rules denying benefit of Modvat Credit can only be in respect of final products and since the commodity mentioned in the show cause notice was not final product, hence the benefit of the Modvat Credit cannot be denied. Thus, it is not in dispute that the bagasse is an agricultural waste of sugarcane, though marketable produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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