Rule 6 CENVAT reversal on bagasse sale was unsustainable where settled precedent excluded bagasse from exempted goods treatment.

Rule 6 of the CENVAT Credit Rules, 2004 was held inapplicable to a demand of 6% on the value of bagasse sold, because earlier binding decisions had already treated bagasse and electricity generated from bagasse as outside the mischief of Rule 6 where the rule's conditions were not met. The Tribunal noted that the issue was no longer res integra and that the Revenue's reliance on a later amendment did not justify departure from the settled position on the facts. The demand was therefore unsustainable, the assessee's relief was sustained, and the Revenue's challenge failed.

---

---

Issues: Whether Rule 6 of the CENVAT Credit Rules, 2004 was applicable to demand 6% of the value of bagasse sold by the assessee, and whether the demand confirmed on that basis was sustainable.

Analysis: The dispute was covered by earlier decisions holding that bagasse and electricity generated from bagasse do not attract the mischief of Rule 6 where no separate inputs or input services are used for exempted goods in the manner contemplated by the rule. The Tribunal noted that the issue was no longer res integra and had already been settled by decisions relied upon by the assessee, including the binding line of authority that such products are neither excisable goods in the relevant sense nor exempted goods for invoking the 6% reversal/demand mechanism. The subsequent amendment relied upon by the Revenue did not persuade the Tribunal to depart from the settled view on the facts of the case.

Conclusion: Rule 6 was not applicable, and the demand of 6% on the value of bagasse sold was unsustainable. The Revenue's appeal failed.

Final Conclusion: The impugned order allowing the assessee's appeal was sustained, and the Revenue's challenge was rejected.

Ratio Decidendi: Where bagasse or electricity generated from bagasse is not treated as exempted goods for the purpose of Rule 6, a demand for 6% of value on its sale cannot be sustained.

---