Cenvat Credit liability on bagasse cleared from sugar manufacture was held unsustainable because bagasse is not excisable.

Bagasse emerging as a residue in sugar manufacture is not an excisable product, so its clearance without duty does not trigger liability under Rule 6(3) of the Cenvat Credit Rules. The issue was treated as settled by binding precedent, and the demand was held unsustainable, with the impugned order set aside in favour of the assessee.

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Issues: Whether the amount demanded under Rule 6(3) of the Cenvat Credit Rules could be sustained in respect of bagasse emerging during manufacture of sugar and cleared without payment of duty.

Analysis: Bagasse is a residue arising in the course of sugar manufacture and is not an excisable product. Since it does not amount to manufacture attracting excise duty, the liability contemplated under Rule 6(3) does not arise. The issue was treated as already settled by binding precedent.

Conclusion: The demand under Rule 6(3) was not sustainable and the impugned order was set aside in favour of the assessee.

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