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of <h1>Tribunal overturns duty demand, interest, and penalty due to lack of evidence</h1> <h3>Ganga Kishan Sahkari Chini Mills Ltd. Versus Commr. of C. Ex., Meerut</h3> Ganga Kishan Sahkari Chini Mills Ltd. Versus Commr. of C. Ex., Meerut - 2017 (346) E.L.T. 450 (Tri. - Del.) Issues:- Whether the appellant correctly availed Cenvat credit in the manufacturing process.- Whether the appellant was required to reverse Cenvat credit for waste products generated during manufacturing.- Whether the department adequately established the appellant's use of Cenvatable inputs for manufacturing waste products.Analysis:Issue 1: The appellant availed Cenvat credit in the manufacturing process.The appellant, engaged in V.P. Sugar and Molasses manufacturing, availed Cenvat credit for capital goods, inputs, and input services. The department alleged that the appellant failed to proportionately reverse the Cenvat credit for waste products, namely bagasse and press mud, generated during manufacturing. The department invoked Rule 6 of Cenvat Credit Rules, 2004, and issued a show cause notice for duty demand, interest, and penalty. The adjudicating authority confirmed the duty demand, which was upheld by the Commissioner (Appeals).Issue 2: Reversal of Cenvat credit for waste products.The appellant contended that bagasse and press mud were inevitable waste products generated at the initial stage of sugar cane processing, not products of the manufacturing process. The appellant argued that as these waste products were not excisable goods, Rule 6 of Cenvat Credit Rules, 2004 did not apply. The Revenue argued that bagasse and press mud were excisable goods sold in the market, requiring payment of 10% of the price due to the lack of separate accounts for inputs used in their manufacture.Issue 3: Establishment of appellant's use of Cenvatable inputs.The Tribunal analyzed Rule 6(1), Rule 6(2), and Rules 6(3)(i) and (ii) of the Cenvat Credit Rules, 2004. It noted that the department failed to establish the appellant's use of Cenvatable inputs for manufacturing bagasse. The show cause notice lacked specifics, and the adjudicating authority's conclusion was unsupported by evidence. As a result, the Tribunal found errors in the application of Rules 6(2) and 6(3)(i) & (ii) and set aside the duty demand, interest, and penalty imposed on the appellant.In conclusion, the Tribunal accepted the appeal, ruling in favor of the appellant due to the department's failure to prove the appellant's use of Cenvatable inputs for manufacturing waste products. The impugned order and order-in-original were set aside, and the appeal was disposed of accordingly.
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