Press mud treated as non-excisable waste; Rule 6(3)(b) reversal not attracted under the bagasse principle.

Press mud arising in sugar manufacture was treated as a non-excisable waste product, and the later amendment to the definition of "goods" in Section 2(d) did not change that position on these facts. The reasoning followed the precedent on bagasse, which was applied as the controlling principle because press mud arose as waste during manufacture and was analogous to bagasse. On that basis, reversal or payment under Rule 6(3)(b) of the Cenvat Credit Rules was not attracted, and the demand was held unsustainable.

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Issues: Whether press mud or spent wash arising during manufacture of sugar was liable to attract reversal/payment of 5% under Rule 6(3)(b) of the Cenvat Credit Rules on the footing that it was an exempted excisable product and marketable goods.

Analysis: Press mud had already been treated in precedent as a non-excisable waste product. The later amendment to the definition of goods under Section 2(d) did not alter the position on the facts, because the material emerged as waste during the manufacture of sugar and was analogous to bagasse. The earlier decision on bagasse was followed as the controlling reasoning, and the same principle was held applicable to press mud.

Conclusion: The demand under Rule 6(3)(b) was unsustainable and the appeal was allowed in favour of the assessee.

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