2018 (10) TMI 1153 – CESTAT MUMBAI – TMI – CENVAT credit – During the course of manufacture of dutiable Sugar & Molasses, “Bagasse” emerges as a waste/by-product, which was being cleared by the Appellant at ‘Nil’ rate of duty – non-maintenance of separate records for the dutiable product and exempted product as required under Rule 6(2) of the CENVAT Credit Rules, 2004, nor followed the procedural under Rule 6(3A) of the CENVAT Credit Rules, 2004 – Circular No. 1027/15/2016-CX dated 25.04.2016.
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Held that:- The Hon'ble Supreme Court’s decision in the matter of DSCL Sugar Ltd. [2015 (10) TMI 566 – SUPREME COURT] has clearly laid down that bagasse is agricultural waste of sugarcane and the waste and residue of agricultural products, during the process of manufacture of goods cannot be said to be result of any process. There is no manufacturing process involved in Bagasse’s production. “Bagasse” is not ‘goods’ but merely a waste or by-product, therefore Rule 6 of CENVAT Credit Rules,
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t For the Respondent : Shri A.B. Kulgod, Assistant Commissioner (AR), Shri M.R. Melvin, Superintendent (AR) ORDER PER: AJAY SHARMA These appeals have been filed against the Order-in-Appeal Nos. NGPII/ APPL/17/2017-18 dated 08.03.2018 & NGP-II/APPL/21/2017-18 dated 09.03.2018 passed by the Commissioner, CGST & Central Excise, Nagpur-II. 2. The brief facts of the matter is that the Appellant is engaged in manufacture of Sugar & Molasses and they are availing facility of CENVAT credit under CENVAT Credit Rules, 2004, for input and capital goods credit as well as input service credit. During the course of manufacture of dutiable Sugar & Molasses, Bagasse emerges as a waste/by-product, which was being cleared by the Appellant at Nil rate of duty. 3. According to the department, the Appellant is availing CENVAT credit on Bagasse and during the period from September, 2014 to June, 2015 they have neither maintained separate CENVAT credit account for the dutiable product and exe
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n of Hon'ble Supreme Court in the matter of Union of India and Others Vs. DSCL Sugar Ltd. reported in 2015 (322) ELT 769 (S.C.) but confirmed the demand of ₹ 5,48,023/- for the period from March, 2015 to June, 2015, in view of the amendment made in Rule 6 of CENVAT Credit Rules, 2004 w.e.f. 01.03.2015, along with interest and penalty. On filing the appeal by the Appellant, the Learned Commissioner, CGST & Central Excise, Nagpur-II upheld the order passed by the adjudicating authority and rejected the appeal. 5. I have heard Learned Consultant for the Appellant and Learned Authorised Representative for the Revenue and perused the records. Learned Consultant for the Appellant submits that the duty has been demanded from them under the provisions of Rule 6 of the CENVAT Credit Rules, 2004 on the ground that they have not paid the specified amount of sale value of Bagasse under Rule 6(3)(i) of CENVAT Credit Rules, 2004. He further submitted that Bagasse is nothing but waste o
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M/s. ECO Cane Sugar Energy Ltd. & Others etc. Vs. CCE, Kolhapur – 2017 (12) TMI 950- CESTAT-MUMBAI (vii) M/s Shivratna Udyog Ltd. & Others etc. Vs. Commissioner of Customs & Central Excise – 2017 (9) TMI 985- CESTAT MUMBAI (viii) Shree Narmada Khand Udyog, Sahakari Mandli Ltd. Vs. Commissioner (Appeals) – 2018 (8) TMI 1075 – CESTAT AHMEDABAD (ix) M/s Simbhaoli Sugar Ltd. Vs. CCE, Noida – 2018 (8) TMI 160 – CESTAT ALLAHABAD (x) M/s Triveni Engineering & Industries Ltd. Vs. C.C. & C.E. & S.T. – Noida – 2018 (8) TMI 6 – CESTAT ALLAHABAD 6. The Learned Authorised Representative on behalf of the Revenue reiterated the finding in the impugned order and submitted that the subsequent Circular of the Board, being Circular No. 1027/15/2016-CX dated 25.04.2016, issued after amendment made in Rule 6(1) of CENVAT Credit Rules, 2004 w.e.f. 01.03.2005 clarifies that Bagasse cleared for consideration from the factory need to be treated like exempted goods for the purpose of re
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s of exempted service except in the circumstances mentioned in sub-rule(2): Provided that the CENVAT credit on inputs………….. Explanation 1:- For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of Rule 2 shall included non-excisable goods cleared for a consideration from the factory. Reading the aforesaid explanation-I reveals that non-excisable goods cleared for consideration, would fall within the scope of the said Rule. The contention of the Revenue is that since, the exempted goods , final products defined under the CENVAT Credit Rules, 2004 in clause (d) and clause (h), respectively include non-excisable goods, which is cleared for consideration from factory, hence Rule 6(1) is applicable to the by-product bagasse. Clause (d) and (h) of the said Rule reads as follows:- (d) "exempted goods" means excisable goods which are exempt from the whole of the duty of excise leviable thereon, and includes goods which are chargeabl
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is Tribunal, and secondly the said Circular was issued on 25.04.2016 i.e. on a later date, whereas the period in dispute is March, 2015 to June, 2015. 9. Almost all the decisions cited by Learned Counsel for the appellant are on identical issue and in all the decisions, this Tribunal has taken a consistent view that Rule 6 of CENVAT Credit Rules, 2004 has no application in given facts. For instance, in the matter of M/s Shivratna Udyog Ltd. & Others (supra), while allowing the appeal, the following order has been passed by this Tribunal :- I have carefully considered the submissions made by both sides. The fact of the case is that the appellants goods in dispute are bagasse, press-mud, boiler ash and compost which are either waste or by-products. The issue is to be decided is whether in terms of Rule 6(3) an amount of 6% is required to be paid on the clearance of such waste/by product. The issue has been considered in various judgments. In the case of Rallies India Ltd. Vs. Union o
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f non-excisable goods, the reversal under Rule 6(3) is required. In this regard he referred to the Hon ble Supreme Court judgment in the case of DSCL Sugar Ltd.(supra). Wherein the Hon ble Supreme Court has held that in case of non-manufactured/non-excisable goods under Rule 6(3) would not apply and after the amendment in Rule 6(1) by inserting explanation, the ratio of the Hon ble Supreme Court judgment will not applicable for the period after amendment. On careful consideration of this submission, I find that the issue before the Hon ble Supreme Court in DSCL Sugar Ltd. was that whether Rule 6(3) is applicable in case of non-excisable goods. However, in the present case all the goods which are cleared without payment of amount under Rule 6(3) are either by product or waste. In case of by product or waste the decision of Jurisdictional High Court of Bombay in the case of Rallies India Ltd.(supra) settled the issue that case of by product or waste cenvat credit cannot be denied. As pro
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