Bagasse as inevitable manufacturing waste was held outside Rule 6(3)(1) liability, with no value-based payment required.

Bagasse generated as an inevitable waste in sugar and molasses manufacture was treated as neither a final marketable excisable product nor a dutiable output attracting reversal under Rule 6(3)(1) of the Cenvat Credit Rules, 2004. The Tribunal followed its earlier view that no amount was payable in respect of such waste, and noted that the Board circular relied on for demand had already been struck down by the Allahabad High Court. The appellant was therefore not liable to pay 10% of the value of bagasse.

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Issues: Whether bagasse, being an inevitable waste arising in the manufacture of sugar and molasses, attracted liability to pay 10% of its value under Rule 6(3)(1) of the Cenvat Credit Rules, 2004 when separate Cenvat accounts were not maintained.

Analysis: Bagasse was treated as an unavoidable waste product generated during manufacture and not as a final marketable excisable product. The Tribunal followed its earlier decision holding that no amount was payable under Rule 6(3)(1) in respect of such waste. It also noted that the Board's Circular No. 904/24/2009-CX dated 28-10-2009 had been struck down by the Allahabad High Court, and that bagasse did not attract the said provision.

Conclusion: The appellant was not liable to pay 10% of the value of bagasse under Rule 6(3)(1) of the Cenvat Credit Rules, 2004.

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