Manufacturer not liable to pay excise duty on "baggase" as it doesn't qualify as "manufacture."

The appellant, a manufacturer of Sugar, Molasses, and Ethanol, was not liable to pay 5% of the value of "baggase" as exempted goods. The court clarified that "baggase" did not fall under the definition of "manufacture," and hence no excise duty could be levied on it. The court also ruled that Rule 6 of cenvat credit rules, 2004 was not applicable to the case, rendering any demand under it unsustainable. The impugned order was set aside, and the appeal was allowed with consequential relief.

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Issues:
- Whether the appellant is liable to pay 5% of the value of exempted goodsRs.
- Applicability of Rule 6 of cenvat credit rules, 2004.

Analysis:

Issue 1: Liability to pay 5% of the value of exempted goods
The appellant, a manufacturer of Sugar, Molasses, and Ethanol, faced a demand confirmed at 5% of the value of exempted goods, specifically "baggase." The appellant procured inputs and availed cenvat credit during manufacturing. The dispute arose as "baggase" was classified as exempted goods with a duty liability of Nil. The appellant was alleged to be liable under Rule 6(3) of cenvat rules 2004 for not maintaining separate accounts for exempted and dutiable goods. The issue was whether the appellant is liable to pay 5% of the value of "baggase."

Analysis of Judgment:
The Hon'ble apex court's decision in Union of India Vs. DSCL SUGAR LTD 2015 clarified that certain goods should be deemed marketable and excisable only if they fall within the definition of "manufacture" as per Section 2(f) of the Act. The amended Section 2(f) broadened the scope of "manufacture" to include specific processes. In this case, it was crucial to determine if any process related to "baggase" was specified in the Section or Chapter notices of the First Schedule. As "baggase" was agricultural waste without undergoing any specific process, it did not fall under the definition of "manufacture." Therefore, no excise duty could be levied on it.

Issue 2: Applicability of Rule 6 of cenvat credit rules, 2004
The Hon'ble apex court's ruling established that Rule 6 of cenvat credit rules, 2004 was not applicable to the case. Consequently, any demand under Rule 6(3) of cenvat credit rules 2004 against the appellant was deemed unsustainable.

Conclusion:
The impugned order was deemed without merit and set aside, allowing the appeal with any consequential relief. The judgment clarified the non-applicability of Rule 6 in the case and the absence of a specified process for "baggase" to be considered excisable goods.

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