Bagasse is residue, not exempted final product, so Rule 6 reversal under Cenvat Credit Rules was unsustainable.

Bagasse arising during sugar manufacture was treated as residue or waste, not as a manufactured final product. On that basis, it could not be classified as exempted goods for the purpose of Rule 6 of the Cenvat Credit Rules, 2004 merely because common inputs were used in producing both dutiable and non-dutiable outputs. The demand for reversal or payment under Rule 6 was therefore not sustainable, and the assessee was entitled to relief.

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Issues: Whether bagasse emerging in the course of manufacture of sugar could be treated as an exempt final product so as to attract reversal/payment under Rule 6 of the Cenvat Credit Rules, 2004.

Analysis: The dispute was governed by the settled position that bagasse generated from crushing sugarcane is not a manufactured final product but a residue or waste. On that basis, it cannot be treated as exempted goods for the purpose of requiring payment of a percentage of its value merely because common inputs were used in the manufacture of dutiable and non-dutiable outputs.

Conclusion: The demand based on Rule 6 of the Cenvat Credit Rules, 2004 was not sustainable, and the assessee was entitled to relief.

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