Bagasse as agricultural waste does not trigger Cenvat reversal under Rule 6(3)(a), making the demand unsustainable.

Bagasse, treated as agricultural waste and residue rather than a manufactured excisable product, was held not to attract the reversal or payment requirement under Rule 6(3)(a) of the Cenvat Credit Rules, 2002/2004. On that basis, the demand raised for its clearance or utilisation in the factory was found unsustainable, and the assessee received consequential relief.

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Issues: Whether Rule 6(3)(a) of the Cenvat Credit Rules, 2002/2004 applies to bagasse cleared or utilized in the factory and whether the demand raised on that basis was sustainable.

Analysis: Bagasse was treated as agricultural waste and residue, and therefore not as a product resulting from manufacture. Since it was not covered by the definition of manufacture and was not an excisable commodity, the obligation to pay under Rule 6(3)(a) for its clearance or utilization did not arise.

Conclusion: The demand was unsustainable and the appeal was allowed in favour of the assessee.

Final Conclusion: The impugned demand and penalty were set aside, and the assessee was held entitled to consequential relief in accordance with law.

Ratio Decidendi: Bagasse, being agricultural waste and residue and not a manufactured excisable product, does not attract the reversal/payment requirements under Rule 6(3)(a) of the Cenvat Credit Rules.

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