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TMI Blog2025 (1) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... aside - appeal allowed. - HON BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) HON BLE MR. AJAYAN T.V., MEMBER (JUDICIAL) For the Appellant : Shri M.N. Bharathi, Advocate For the Respondent : Smt. O.M. Reena, Authorised Representative ORDER Order :- Per Mr. VASA SESHAGIRI RAO These four Excise Appeals No. E/40479-40782/2015 have been filed by M/s. Shakthi Sugars Ltd., Sivagangai (hereinafter referred to as Appellant) being aggrieved by the impugned Orders-in-Original Nos. 01-04/2014 dated 28.11.2014 passed by the Commissioner of Central Excise, Madurai confirming the demands of Rs.1,06,34,961/-, Rs.35,02,546/-, Rs.26,58,837/-and Rs.18,55,058/- under Rule 14 of Cenvat Credit Rules, 2004(CCR) read with Section 11A(1) of Central Excise Act, 1944 (ACT), along with applicable interest and imposing penalty equal to the demands confirmed, under Rule 15(1) of CCR, 2004. 2. Facts briefly stated are that, the Appellant was engaged in the manufacture of Sugar and Molasses and during such process, Bagasse emerged as a bye product at the milling stage which was captively consumed in the co-generation plant for generating electricity which was in turn captively consumed in the sugar plant and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. Shakumbari Sugar and Allied Industries Limited [2005 (189) ELT (SC)] wherein it was held that Bagasse generated during the course of manufacture of sugar does not become a final product although the product is mentioned as an entry in the Schedule to CETA and therefore cannot be regarded as a final product, or an exempted product. iv. Reliance was also placed on the decision in the case of Shri Siddeshwar SSK Ltd Vs. Commissioner of Central Excise, Pune III [2014 (309) ELT 495] wherein it was held that waste products arising during the manufacture of Sugar such as Bagasse and compost products could not be considered as final products and therefore, payment of sum equal to 5% / 10% of the price of the goods was not required in terms of Rule 6(3) of CCR. Further reliance was also placed on the decisions in the case of CCE, Lucknow Vs DSCL Sugar [2014 (304) ELT33-ALL] and CCE, Trichy Vs. Tamilnadu Newsprint and Papers Limited [2014 (309) ELT 279]. v. It was submitted that the definition of Rule 2(d) of CCR would be applicable only to the exempted or final goods manufactured and hence not applicable to Bagasse which is not manufactured or produced from inputs/ input services in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se appeals is:- i. Whether the Appellant is liable to pay an amount equivalent to 5% / 6% on the value of Bagasse clearances in terms of Rule 6(3) of CENVAT Credit Rules, 2004? 8. We find that the Appellant engaged in the manufacture of sugar and molasses were availing credit on inputs/ inputs services and during the manufacture, Bagasse, a Bye product is produced which in turn is used in the generation of electricity, a non-dutiable product which is both captively consumed for Sugar manufacturing and also supplied to the grid of the TNEB. Besides, the Bagasse produced is cleared to some Customers for generation of power. The Department issued these four Show Cause Notices for the period between November 2010 to November 2012 seeking to recover the Cenvat credit availed and utilised in the manufacture of dutiable and exempted products as the Appellant had not maintained separate records thus contravening the provisions of Rule 6 of CCR. The Appellant have denied the allegations of the department and maintained that Bagasse was only an intermediary or waste emerging during the course of manufacture and not a final product and that the issue was already settled in favour of the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Union of India and Others v. M/s. DSCL Sugar Ltd. and Others (supra) specifically in the context of Bagasse, Rule 6 applies only when there is a manufacture of final products or of exempted products, and if there is no manufacture, Rule 6 of the Cenvat Credit Rules, 2004, has no application. 31. This amendment may have the effect of treating Bagasse to be an exempted goods, but cannot result in Bagasse being manufactured goods, as the nature of Bagasse remains that of an agricultural waste and residue and is not in effect a product. This aspect and character of Bagasse remains unaltered by insertion of Explanation 1. 32. In absence of Bagasse being a manufactured final product, the obligation of a reversal of Cenvat period under Rule 6(1) of the Cenvat Credit Rules, 2004 is not attracted. It has also been noticed that Bagasse has always been an exempted goods under Rule 2(d) of the Cenvat Credit Rules, 2004. It has been mentioned in Central Excise Tariff Heading 2303 20 000 and was subjected to NIL rate of duty. It therefore, fell within the definition of exempted goods as defined under Rule 2(d) and is not a non-excisable goods, as mentioned in the impugned c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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