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of <h1>CEGAT Rules Bagasse Not Taxable, Clarifies It's a By-Product</h1> The CEGAT allowed the appeal, determining that bagasse is not a final product and therefore not liable for payment under Rule 57CC for central excise ... Modvat credit Issues Involved: Determination of liability u/r 57CC for bagasse cleared at 'Nil' rate of duty and interpretation of bagasse as a final product.Issue 1: Liability u/r 57CC for bagasse cleared at 'Nil' rate of dutyThe Assistant Commissioner confirmed an amount under Rule 57CC for bagasse cleared at 'Nil' rate of duty, which was challenged in the appeal. The appellants argued that bagasse is not a 'final product' as per Rule 57CC and cited a similar case where the appeal was allowed based on identical facts. The appellants contended that Rule 57D(1) prohibits denying or varying Modvat credit based on waste or by-products. The department argued that bagasse is a final product and liable for payment under Rule 57CC, asserting that Rule 57D(1) is not applicable in this case.The CEGAT examined the submissions and referred to a previous order where it was held that Rule 57CC cannot be invoked to levy central excise duty on bagasse as it is considered waste from the manufacturing process of sugar. The CEGAT disagreed with the previous order's finding that no input was used in the generation of bagasse, stating that all inputs are used in the integrated manufacturing process of sugar, molasses, and bagasse. While agreeing that bagasse is not a final product, the CEGAT clarified that the amount levied under Rule 57CC is not central excise duty.Issue 2: Interpretation of bagasse as a final productThe CEGAT determined that bagasse cannot be considered a final product based on its classification under Heading No. 23.01 of the Central Excise Tariff as waste from the food industries. The CEGAT emphasized that no unit produces waste as a final product, indicating that bagasse is a by-product of sugar manufacture. The CEGAT concluded that no demand can be made on the appellants under Rule 57CC as bagasse is not a final product of the sugar and molasses industry.In conclusion, the CEGAT set aside the orders of the lower authorities, allowing the appeal based on the determination that bagasse is not a final product and therefore not liable for payment under Rule 57CC.
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