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TMI Blog2024 (5) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... /D-SML/2020-21 dated 30.09.2020 passed in the case of M/s SBEC Sugar Ltd. Village- Malakpur, Baraut, Baghpat (U.P.) is rejected." 2.1 Respondents are engaged in manufacture of excisable goods namely sugar, molasses, ethyl alcohol/ rectified spirit, denatured ethyl alcohol & Fusal oil. They are also availing the CENVAT Credit of the duties/ taxes paid on inputs, capital goods and input services. 2.2 A show cause notices as detailed below were issued to the respondent for the demand and recovery of amount payable in terms of Rule 6 of the CENVAT Credit Rules, 2004, in respect of the clearances/ sale of Bagasse and Press Mud for the period December , 2016 to June, 2017. S No Show Cause Notice Amount 'Rs Number Date Period 1 V(30)/Adj/CEx/D- SML/SBEC/94/18/736 14.11.2018 Dec 16 to Jan 17 42,20,769/- 2 V(30)/Adj/CEx/D- SML/SBEC/143/18/844 01.01.2019 Feb 17 24,89,608/- 3 V(30)/Adj/CEx/D- SML/SBEC/175/18-19/957 29.03.2019 Mar 17 25,34269/- 4 V(30)/Adj/CEx/D- SML/SBEC/05/19-20/119 06.05.2019 Apr 17 to June 17 27,33,680/- 2.3 These show cause notice have been adjudicated as per the order in original No 10-13/AC/D-SML/2020-21 dated 30.09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party neither paid an amount equal to 6% of the value of exempted goods nor reversed proportionate credit attributable to inputs/input services used for the manufacture of exempted goods as envisaged under the said Rule 6(3) of CENVAT Credit Rules, 2004. 3. Rule 6 of the CENVAT Credit Rules, 2004 was amended vide Notification No.6/2015-CE(NT) dated 01.03.2015 in as much as in sub-rule (1), after the proviso, the following Explanations were inserted, namely:- "Explanation-1 For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non- excisable goods cleared for a consideration from the factory. Explanation-2 Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise Act and the rules made thereunder. 4. The Commissioner (Appeals) in his subject Order-in-Appeal dated 31.03.2021 has observed that the issue involved in the instant case stood decided by the Hon'ble Apex Court in the case of M/s DSCL Sugars [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent has filed SLP (C) [No. 001700/2021; Diary No. 585/2021] in the Hon'ble Supreme Court. 7. The instant appeal is being filed in terms of Para 4 of CBEC's Instruction bearing F. No. 390/Misc./116/2017-JC dated 22-8-2019 read with Para 1.3 of CBEC's Instruction bearing F. No. 390/Misc/163/2010-JC dated 17.08.2011 wherein it has been stipulated and specified that: 1.3. Adverse judgments relating to the following should be contested irrespective of the amount involved: (a) Where the constitutional validity of the provisions of an Act or Rule is under challenge (b) Where Notification/ Instruction Order or Circular has been held illegal or ultra vires In the instant case, substantive question of law is involved in as much as Commissioner (Appeals) vides his Order-in-Appeal No.MRT/EXCUS/000/APPL-MRT/287/2020-21 dated 31.03.2021 has dropped the demand by primarily placing reliance on the said Judgment of the Hon'ble Apex Court in the case of M/s DSCL. Sugars [2015(322)ELT769 (SC)] without taking note of the significant fact that the said judgment dated 24.07.2015 related to case(s) before the said amendment in Rule 6 of the CENVAT Credit Rules, 2004, so affe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le in the case of bagasse and press-mud which emerged during the process of manufacture of sugar. The issue of applicability of amended provisions of Rule 6 of the Rules, and Board's Circular No. 1027/15/2016-CX dated 25.04.2016 w.e.f. 01.03.2015 was no more open for decision in the present appeal. I also find that the appeal filed by the department against the judgement of the Hon'ble High Court, Allahabad in the case of Balrampur Chini Mills vs. UOI [ 2019 (368) E.L.T. 276 (All) had already been dismissed by the Hon'ble Apex Court on 21.01.2021. The adjudicating authority had, therefore, rightly dropped the demands. The appeal filed by the appellant department is, therefore, without any substance and merit." 4.3 In this regard, I find that Hon'ble Supreme Court in the case of UOI vs DSCL Sugars [2015 (32) ELT 769 (SC)] has been held as under: "10. In the present case it could not be pointed out as to whether any process in respect of Bagasse has been specified either in the Section or in the Chapter notice. In the absence thereof this deeming provision cannot be attracted. Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put service on which service tax is payable. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options as applicable to him, namely :- (i) the manufacturer of the goods shall pay an amount equivalent to five per cent of the value of the exempted goods and the provider of output service shall pay an amount equal to six per cent of the value of the exempted services; or (ii) ............." 20. The Union of India amended Cenvat Credit Rules, 2004 with effect from 1-3-2015 by inserting [Explanations 1 and 2 in Rule 6(1), which reads as under :- "Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. Explanation 2. - Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the principles of valuation contained in the Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as to whether any process in respect of Bagasse has been specified either in the section or in the chapter notice. In the absence thereof this deeming provision cannot be attracted. Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of section 2(f) of the Act and [in] the absence of manufacture, there cannot be any Excise duty. Since it is not a manufacture, Rule 6 of the Cenvat Credit Rules, 2004, shall have an application rightly held by the High Court." 27. After the aforesaid judgment which has clearly held Bagasse not to be a manufactured product, and therefore Rule 6 of the Cenvat Credit Rules, 2004 shall have no application, Section 6(1) has been amended by inserting the 2 Explanations, which the respondent contends is sufficient to include Bagasse within the fold of Section 6, and further to justify the stand for a reversal of Cenvat Credit Rules, 2004. 28. A perusal of the Explanation 1 to Rule 6 would indicate that it provides that the exempted goods and final product as defined in Clauses (d) & (h) of Rule 2 shall inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agasse being a manufactured final product, the obligation of reversal of Cenvat Credit under Rule (1) of the Cenvat Credit Rules, 2004 is not attracted, and the ratio laid down in the judgment of the Hon'ble Supreme Court in the case of Union of India and others v M/s. DSCL Sugar Ltd and Others (supra) still holds the field. Rule 6 of the Cenvat Credit Rules would have no application for reversal of Cenvat Credit in relation to Bagasse. The Circular No. 1027/15/2016-CX, dated 25-4-2016, contained in Annexure-1 to the writ petition to the extent that it includes Bagasse under the purview of the reversal of credit of input services in terms of Rule 6 of the Cenvat Credit Rules, 2004, as well as the impugned show cause notice dated 24-3-2017 contained in Annexure-2, are hereby quashed." 4.5 The circular dated 25.04.2016 which is the backbone of the appeal filed by the revenue has been quashed by the jurisdictional high court. Further revenue has relied upon the decision of Hon'ble Punjab and Haryana High Court. I do not find any merits in the said submission of the revenue as the issue needs to be considered in light of the decision of the jurisdictional High Court. Thus, we do not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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