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TMI Blog2018 (10) TMI 1153X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in manufacture of Sugar & Molasses and they are availing facility of CENVAT credit under CENVAT Credit Rules, 2004, for input and 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 June, 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 followed the procedurel under Rule 6(3A) of the CENVAT Credit Rules, 2004 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned Consultant for the Appellant submits that the duty has been demanded from them under the provisions of Rule 6 of the CENVAT Credit Rules, 2004 on the ground that they have not paid the specified amount of sale value of "Bagasse" under Rule 6(3)(i) of CENVAT Credit Rules, 2004. He further submitted that "Bagasse" is nothing but waste of the finished goods i.e. Sugar and Molasses and therefore no amount is required to be paid to the department. He cited a numbers of decisions of the Hon'ble Supreme Court as well as of the Hon'ble High Court and also of this Tribunal in support of his arguments that no amount is to be paid and also that reversal of CENVAT credit under Rule 6 of CENVAT Credit Rules, 2004 is not required in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and inputs services in terms of Rule 6 of CENVAT Credit Rules, 2004, and therefore the 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 since 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 Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision in the matter of DSCL Sugar Ltd. (supra) has clearly laid down that bagasse is agricultural waste of sugarcane and the waste and residue of agricultural products, during the process 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 no application on the facts of the instant case, firstly no Circular can override the Rules as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered the provisions of Rule 6 of Cenvat Credit Rules 2004. The similar issue was considered in the case of Union of India vs. Hindustan Zinc Ltd. (supra) wherein it 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). Whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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