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TMI Blog2018 (10) TMI 966X X X X Extracts X X X X X X X X Extracts X X X X ..... nd capital goods credit as well as input service credit. During the course of manufacture of dutiable Sugar & Molasses, "Bagasse" emerges as a waste/by-product, which was being cleared by the Appellant at 'Nil' rate of duty. 3. According to the department, the Appellant is availing CENVAT credit on "Bagasse" and during the period from September, 2014 to July, 2015 they have neither maintained separate CENVAT credit account for the dutiable product and exempted product as required under Rule 6(2) of the CENVAT Credit Rules, 2004, nor reversed the CENVAT credit on sale value of "Bagasse" as per Rule 6(3)(i) of CENVAT Credit Rules, 2004, therefore a show-cause notice dated 28.08.2015 was issued to the Appellant as to why: "(i) The amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the Appellant submits that the reversal of CENVAT credit has been demanded under the provisions of Rule 6 of the CENVAT Credit Rules, 2004 for "Bagasse" cleared by them. He further submitted that "Bagasse" is nothing but waste of the finished goods i.e. Sugar and Molasses and therefore CENVAT credit is not required to be reversed. He cited a numbers of decisions of the Hon'ble Supreme Court as well as of this Tribunal in support of his arguments that reversal of CENVAT credit under Rule 6 of CENVAT Credit Rules, 2004 is not required in respect of waste or by-product or refuse generated during the process of manufacturing. The list of cases cited by him are as under:- (i) Rallis India Ltd. Vs. Union of India - 2009 (233) ELT 301 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Commissioner has rightly rejected the appeal of the Appellant. 7. The adjudicating authority has dropped the demand on the waste/byproduct, "Bagasse" for the period prior to 01.03.2015 but only because an explanation was inserted to Rule 6 of CENVAT Credit Rules, 2004 vide notification dated 01.03.2015 a view was taken by the Revenue that "Bagasse" being non-excisable goods and since it was cleared from the factory against consideration, therefore it would come within the scope of Rule 6 of the CENVAT Credit Rules, 2004. The said explanation to Rule 6 read as under:- "Rule 6(1) The Cenvat credit shall not be allowed on such quantity of inputs used in or in relation to the manufacture of exempted goods or for provision of exempte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of manufacture of goods cannot be said to be result of any process. There is no manufacturing process involved in Bagasse's production. "Bagasse" is not 'goods' but merely a waste or by-product, therefore Rule 6 of CENVAT Credit Rules, 2004 is not applicable in the present case. "Bagasse" is bound to come into existence during the crushing of the sugarcanes and is an unavoidable agricultural waste. For two reasons the Board's Circular dated 25.04.2016 has been wrongly relied upon by the Learned Commissioner (Appeals) while rejecting the appeal, firstly no Circular can override the Rules as well as the law laid down by the Hon'ble Supreme Court and the orders of this Tribunal, and secondly the said Circular was issued on a later date, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that the Sulfuric Acid which is generated as a by product recovery of 8% under Rule 6 of Cenvat Credit Rules 2004 is not correct. In view of the above judgments the issue whether Rule 6(3) is applicable in case of removal of non-dutiable waste or by product is settled in favour of the assessee. As regard the submissions made by Ld. ARs that after insertion of explanation in Rule 6(1), even in case of non-excisable goods, the reversal under Rule 6(3) is required. In this regard he referred to the Hon'ble Supreme Court judgment in the case of DSCL Sugar Ltd.(supra). Wherein the Hon'ble Supreme Court has held that in case of non-manufactured/non-excisable goods under Rule 6(3) would not apply and after the amendment in Rule 6(1) by in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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