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TMI Blog2024 (5) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue also stand dismissed' - it is found that Bagasse and Press Mud, being agricultural waste, cannot be said to be manufactured, and therefore, Rule 6 is not applicable. Validity of CBEC Circular No. 1027/15/2016-CX dated 25.04.2016 - HELD THAT:- The amendment carried out in Rule 6 of CCR, with effect from 01.03.2015, clarifying that for the purpose of Rule 6, exempted goods would include non-excisable goods and the CBEC Circular No 1027/15/2016-CX dated 25.04.2016, issued in this regard, is not relevant as Bagasse and Press Mud, being excisable goods, and chargeable to Nil rate of duty, was already covered under the ambit of exempted goods‟ referred to in the said Rule 6. However, this does not alter the afct there is no manufacture involved in the emergence of Bagasse and Press Mud and therefore Rule 6 of the CCR is not applicable - 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. Thus, we do not find any merits in this appeal filed by the revenue. There are no merits in this appeal filed by the revenue - appeal dismissed. - HON BLE MR. P. K. CHOUDHARY , MEMBER ( JUDICIAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Further, by virtue of the Explanation-2 inserted in Rule 6(1) of the Cenvat Credit Rules, the value of non-excisable goods shall be the invoice value and where such invoice value is not available, the value of non- excisable goods shall be determined by using reasonable means, consistent with the principles of valuation contained in the Excise Act and the Rules made there-under. From the above Explanations, it is clear that exempted goods and final products now include non-excisable goods also for the purpose of Rule 6 of the Cenvat Credit Rules, 2004 which provides the mechanism for availment of Cenvat Credit by a manufacturer of dutiable and exempted goods and providers of taxable and exempted services. In all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect from 01.03.2015 12. In his regard, the relevant portion of Board's Circular No. 1027/15/20 16-CX dated 25.04.2016 i also reproduced below for the sake of clarity:- 4.2 Consequently, Bagasse, Dross and Skimmings of non-ferrous metals or any such by product or waste, which are non-excisable goods and are cleared for a consideration from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and input services, in terms of Rule 6 of the Cenvat Credit Rules, 2004 . The present appeal is being filed in view of clause 1.3.2.b) of CBEC Instruction issued vide F.No.390/Misc/163/2010-JC dated 17.08.2011 which provides that Adverse judgments relating to the following should be contested irrespective of the amount involved: 1.a). ..... 2.b) where Notification/Instruction/Order or Circular has been held illegal or ultra virus . In this case, substantive question of law is involved, as the provisions of Circular No.1027/15/2016-CX dated 25.04.2016 issued by the CBEC and of Rule 6 of Cenvat Credit Rules, 2004, have been ignored by the appellate authority which clearly provide reversal of Cenvat credit in terms of 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 ..... he adjudicating authority has failed to point out as which inputs or input services were common for the manufacture of dutiable as well as exempted products and what part of the same was not used in the manufacture of the dutiable goods i.e. sugar/ molasses. The amendment carried out in Rule 6 of CCR, with effect from 01.03.2015, clarifying that for the purpose of Rule 6, exempted goods would include non-excisable goods and the CBEC Circular No 1027/15/2016-CX dated 25.04.2016, issued in this regard, is not relevant as Bagasse and Press Mud, being excisable goods, and chargeable to Nil rate of duty, was already covered under the ambit of exempted goods‟ referred to in the said Rule 6. However, this does not alter the afct there is no manufacture involved in the emergence of Bagasse and Press Mud and therefore Rule 6 of the CCR is not applicable as held by the Apex Court in their decision referred to above. I further find that previous period demand was set aside vide OIA No MRT/EXCUS/000/APPL-MRT/421/2018-19 dated 17.12.2018. The demand for subsequent period is not sustainable. 4.3 Relying on the decision of Hon ble Supreme Court in case DSCL Sugar referred in the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual 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 Act and the rules made thereunder. 21. A perusal of Rule 6(1) clearly shows that the manufacturer has to manufacture dutiable goods as well as exempted goods. Since Bagasse is not manufactured goods but the waste product which emerges/comes into existence in the process of manufacture of sugar, and therefore the production of Bagasse cannot be held to be manufacture of exempted goods. 22. Rule 6(2) provides that where a manufacturer avails of Cenvat credit in respect of any inputs and manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 include non-excisable goods cleared for a consideration from the factory. 29. Explanation 1, talks about the inclusion of non-excisable goods cleared for consideration from the factory within the category of exempted goods or final products while the Circular dated 25-4-2016 proceeds on the basis that Bagasse is a non-excisable goods and is now to be treated like exempted goods for the purpose of a reversal of input and Input service. 30. As noted by the Hon ble Supreme Court in the case of Union of India and Others v. M/s. DSCL S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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