Navabharat Ventures Ltd Versus CCT, Visakhapatnam –GST Vice-Versa
Central Excise
2018 (9) TMI 245 – CESTAT HYDERABAD – TMI
CESTAT HYDERABAD – AT
Dated:- 28-8-2018
E/30717/2016, E/31203/2017 , E/31237/2017, E/31283/2017, E/30619/2018 – Final Order No. A/31070-31074/2018
Central Excise
HON'BLE MR. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL)
Shri G. Prahlad, Advocate for the Assessee
Smt B.V. Siva Naga Kumari, Commissioner/AR for the Revenue
ORDER
[ Order Per : P. V. Subba Rao ]
1. All these appeals are filed by the Assessee except Appeal No.E/31203/2017 which is filed by the Revenue.
2. These appeals involve a single issue and hence are being disposed of by a common order. The appellant/assessee is a manufacturer of sugar. They also manufacture certain other commodities as follows:
a. Dutiable Products – Sugar, Molasses, Denatured Spirit, Fuel Oil, etc., and
b. Exempted Final Products – Organic manure, Rectified Spirit, Bagasse, Bio earth and power.
3.
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imposed penalty as proposed. The appellant's appeals to the first appellate authority have been rejected and hence, these appeals are filed. As far as the appeal filed by the department is concerned, it is alleged in the appeal that the first appellate authority has wrongly demanded a duty @ 6% of value of exempted goods under Rule 6(3)(i) of CENVAT Credit Rules, 2004 which is beyond the scope of the show cause notice. The show cause notice had only demanded duty proportionate to the value of the exempted goods. Therefore, the appeal of the revenue is that the Order-in-Appeal No. VIZ-EXCUS-002-APP-043-17- 18, Dt. 21.08.2017 passed by Commissioner (Appeals) may be modified to this extent. The appellant/assessee readily agrees with the prayer of the revenue on this ground.
4. Learned Counsel for the appellant submits that they have a sugar division which manufactures sugar and produces bagasse and molasses also. They also have a power division which uses bagasse to produce power, part o
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er-in-Original and Order-in-Appeal that they failed to maintain separate accounts for availment of credit on input services in respect of dutiable and exempted final products. It has also been alleged that they failed to comply with the provisions of Rule 6 knowingly and availed credit on input services which went into both dutiable and exempted goods. The appellant/assessee contended these assertions on the following grounds:
a. They are maintaining separate books of accounts for each division and have been maintaining records of inputs availed in respect of each unit.
b. The provisions to Rule 6 do not apply to the waste that is generated during the manufacture such as bagasse.
c. The rectified spirit manufactured by them from molasses is an intermediary product for the final product denatured spirit although in some cases, they cleared the rectified spirit as such.
d. The bio-earth or organic manure manufactured by them is also an excisable product and is being cleared on pa
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ed spirit, he concedes that they are liable to reverse credit of input services to the extent the rectified spirit has been cleared as such without payment of duty but not to the extent it has been denatured and cleared on payment of duty. As far as the electricity is concerned, he submits that they have already reversed the input service credit to the extent the electricity has been sold to outsiders. To the extent the electricity has been consumed within the factory, it becomes an intermediary product and not an exempted product and hence, no input service needs to be reversed. He relied on the judgment in the case of DSCL Sugar Ltd [2015-(322)-ELT-(769)-(SC)] and argued that the bagasse is only an agricultural waste or residue produced during the manufacture of sugar and is not a product by itself, let alone being an intermediary product. Therefore, the question of reversing credit of input services which have gone into production of bagasse does not arise. Similarly, Hon'ble High c
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uiring reversal of CENVAT credit. There are also other products with respect to which the appellant claims that they have already reversed the CENVAT credit such as on electricity. There are products such as organic manure which the appellant claims to have cleared on payment of duty. Therefore, the proper course of action is to remand the matter back to the original authority to examine the claims of the appellant in respect to each product and re-determine the amount of duty, if any, to be recovered from them after following principles of natural justice. Without passing any comments on the merits of the case, I remand the matter back to the original authority to re-determine the quantum of input service credit, if any, required to be reversed by the appellant/assessee taking into account their claims and the other judicial pronouncements which they have relied upon.
7. The appeals filed by the assessee as well as the department are allowed by way of remand to the original authority
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