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TMI Blog2023 (5) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... w laid down by the Hon ble Supreme Court in the matter of UNION OF INDIA VERSUS DSCL SUGAR LTD. [ 2015 (10) TMI 566 - SUPREME COURT ] in which the Hon ble Supreme Court has considered both the periods i.e. the periods before and after the insertion of explanation in Section 2(d) ibid, which has been heavily relied upon by the authorities below in fastening the duty liability on the appellant herein. The Hon ble Supreme Court has held that bagasse being an agricultural waste or residue, there could be no manufacturing activity. On the basis of the amendment to Section 2(d), the department has taken out one circular No. 904/24/2009-CX, dated 28.10.2009 in line with the amendment in Section 2(d) ibid, which was also relied upon by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest and penalty on the reduced demand. 2. The issue involved herein is whether, in view of amendment of Section 2(d) of Central Excise Act, 1944 w.e.f. 10.5.2008 the appellant is liable to pay u/r. 6(3) of Cenvat Credit Rules, 2004 an amount equal to 5% of the sale value of exempted product i.e. bagasse, generated during the manufacturing of sugar/molasses as they failed to maintain separate accounts for dutiable and exempted goods as required under Rule 6(2) ibid? 3. The facts are as follows. The appellants are engaged in manufacture and clearance of sugar and molasses and are paying duty on all these final products. They were availing Cenvat credit of excise duty paid on inputs and capital goods and also on service tax paid on in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th interest and penalty on the reduced demand. 4. The period in issue is from 1.3.2010 to 30.9.2010. According to learned counsel for the appellant the bagasse is nothing but waste which was produced during the manufacturing of sugar and no manufacturing activity has been done by the for the production of bagasse and therefore they are not liable to pay any duty on it. Per contra learned Authorized Representative submits that by amending Section 2(d) ibid an explanation was inserted in the said section w.e.f. year 2008 and a deeming provision has been created therefore once it is established that an article, a substance or material is capable of being bought and sold, it becomes goods and once any such goods find entry in the First S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd attracts nil rate of duty. 5 . However, show cause notices were issued to the respondents herein stating that Bagasse would be subject to duty under the Central Excise Act, 1944, as other products . These show cause notices were issued to the respondents in terms of the provision contained in Rule 6(3) of the Cenvat Credit Rules, 2004 demanding various amounts. The said show cause notices were challenged by the respondents filing writ petitions in the High Court of Allahabad. The High Court has allowed these writ petitions holding that Bagasse being a waste and not a manufactured product, no duty is payable thereupon. For arriving at this conclusion, the High Court also have relied upon the judgment of this Court in Balrampur Chini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a manufactured product; (ii) which is specified in relation to any goods in the section or Chapter notes of [The First Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to [manufacture; or] (iii) which in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer; and the word manufacture shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the matter of DSCL Sugar Ltd. (surpa) another circular No. 1027/15/2016-CX, dated 25.4.2016 has been issued by the department stating that since the period covered in the aforesaid decision of the Hon ble Supreme Court applies to both period i.e. before and after the insertion of explanation in section 2(d) ibid therefore the circular dated 28.10.2009 becomes non est and are rescinded. 7. Since the law laid down by the Hon ble Supreme Court constitutes declaration of the law within the meaning of Article 141 of the Constitution of India which would be binding on all Court and Tribunals, therefore following the aforesaid decision of the Hon ble Supreme Court, the issue involved herein decided in favour of the Appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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