Bagasse not a manufactured good under Cenvat Credit Rules: Tribunal dismisses Revenue's appeal The Tribunal, following the precedent set by the Hon'ble Apex Court in DSCL Sugar Ltd., held that bagasse, as waste emerging during sugar and molasses ...
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Bagasse not a manufactured good under Cenvat Credit Rules: Tribunal dismisses Revenue's appeal
The Tribunal, following the precedent set by the Hon'ble Apex Court in DSCL Sugar Ltd., held that bagasse, as waste emerging during sugar and molasses manufacturing, does not qualify as a manufactured good. Therefore, Rule 6 of Cenvat Credit Rules 2004 did not mandate the reversal of cenvat credit or payment of a percentage of the value of bagasse. Consequently, the Revenue's appeal against the dropped demand was dismissed, affirming that the respondent was not obligated to pay the stipulated percentage of the value of bagasse.
Issues involved: - Appeal against the dropped demand by the Commissioner (Appeals) due to the manufacturing of bagasse without payment of duty. - Interpretation of Rule 6 of Cenvat Credit Rules 2004 regarding the requirement to pay a percentage of the value of bagasse.
Analysis: - The appeal was filed by the Revenue against the dropped demand by the Commissioner (Appeals) concerning the manufacturing of sugars and molasses where bagasse emerged as waste without payment of duty. The Revenue contended that since bagasse is an exempted good and the respondent did not reverse cenvat credit for input services used in bagasse, a payment of 5%/10% of the value of bagasse was required. The issue revolved around the interpretation of Rule 6 of Cenvat Credit Rules 2004 in this context.
- The Tribunal considered the settled position on the issue by referring to the judgment of the Hon'ble Apex Court in the case of DSCL Sugar Ltd. The Apex Court had ruled that bagasse, emerging during the manufacturing process of sugar and molasses, does not qualify as a manufactured good. Consequently, the provisions of Rule 6 of Cenvat Credit Rules 2004, requiring the reversal of cenvat credit on inputs/input services attributable to bagasse, were deemed inapplicable. As a result, the respondent was not obligated to pay the stipulated percentage of the value of bagasse.
- Based on the precedent set by the Hon'ble Apex Court, the Tribunal held that the issue was no longer res integra and that the respondent was not required to reverse cenvat credit or pay the demanded percentage of the value of bagasse. Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed the same. The judgment was pronounced in open court on 24/10/2017 by Shri Ashok Jindal, J.
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