2020 (2) TMI 140 - AT - Central Excise

Tribunal: Bagasse & Press Mud Not Subject to CENVAT Rule 6 After 2015

Sahakar Maharshi Bhausaheb Thorat SSK Ltd Versus C.C.E. & S.T. Nasik

The Tribunal ruled that Rule 6 of CENVAT Credit Rules, 2004 does not apply to by-products such as bagasse and press mud produced during the manufacturing ... CENVAT Credit - by-products/exempt goods - Bagasse, press mud generated during the course of manufacture of sugar, molasses - manufacture of taxable as well as exempt goods - Board’s Circular No.1027/15/2016-CX, dt.25.04.2016 - applicability of Rule 6 of CCR - HELD THAT:- The issue is covered by the judgment of this Tribunal in series of cases and also the recent judgment of Hon'ble Allahabad High Court in the case of M/S BALRAMPUR CHINI MILLS LTD. THROUGH ITS GENERAL MANAGER VERSUS UNION OF INDIA, MINISTRY OF FINANCE DEPARTMENT OF REVENUE [2019 (5) TMI 972 - ALLAHABAD HIGH COURT] Where quashing the Board’s Circular for the period after issuance of Notification No.06/2015-CE(NT), dt.01.03.2015, Hon'ble High Court observed that Rule 6 of the CENVAT Credit Rules would have no application for reversal of CENVAT Credit in relation to Bagasse. Appeal allowed - decided in favor of appellant. Issues:Applicability of Rule 6 of CENVAT Credit Rules, 2004 to by-products generated during the manufacture of excisable goods.Analysis:The appeal was filed against an order passed by the Commissioner (Appeals) concerning the recovery of 6% of the value of exempted goods under Rule 6(3) of CENVAT Credit Rules, 2004. The by-products, including press-mud, bagasse, and fly ash, emerged during the manufacture of excisable goods. The Appellant argued that the issue was covered by the judgment of the Hon'ble Allahabad High Court in the case of Balarampur Chini Mills Ltd Vs UoI. The Appellant cited Board's Circular No.1027/15/2016-CX, which clarified the treatment of by-products as exempted goods. The Tribunal remanded the matter to the Commissioner (Appeals) for reconsideration, who upheld the initial order. The Appellant contended that Rule 6 of CENVAT Credit Rules, 2004 should not be applicable to the by-products based on previous judgments and Tribunal decisions.The Revenue reiterated the findings of the Commissioner (Appeals) during the proceedings. The Tribunal examined whether Rule 6 of CENVAT Credit Rules, 2004 applied to by-products like bagasse and press mud generated during the production of excisable goods after 01.03.2015. Citing previous Tribunal cases and the judgment of the Hon'ble Allahabad High Court in Balarampur Chini Mills Ltd Vs UoI, the Tribunal concluded that Rule 6 did not apply to such by-products post the issuance of Notification No.06/2015-CE(NT) on 01.03.2015. The Tribunal referenced the High Court's observation that Bagasse, not being a final manufactured product, did not attract the reversal of CENVAT Credit under Rule 6. The Tribunal, in line with precedent, set aside the impugned order and allowed the appeal with any consequential relief as per the law.In summary, the Tribunal's judgment clarified the non-applicability of Rule 6 of CENVAT Credit Rules, 2004 to by-products like bagasse and press mud generated during the manufacturing of excisable goods post 01.03.2015, aligning with previous Tribunal decisions and the Hon'ble Allahabad High Court's ruling in a similar case. The Tribunal emphasized that such by-products, not being final manufactured products, did not fall under the purview of Rule 6 for the reversal of CENVAT Credit.