Press mud and biocompost treated as non-excisable, so Cenvat reversal demand on common inputs failed.

Press mud was treated as a waste product and held to be non-marketable and non-excisable on the basis of earlier CESTAT decisions. Enriched press mud or biocompost prepared by mixing press mud with distillery effluents was also regarded as non-excisable. The Tribunal further noted that the demand had travelled beyond the show cause notice insofar as it referred to enriched press mud/biocompost. On that footing, the Cenvat credit reversal provision applicable to dutiable and exempted goods was held inapplicable, and the demand could not be sustained.

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Issues: Whether press mud and enriched press mud/biocompost were excisable and whether reversal of 10% of the value under the Cenvat credit scheme could be demanded on the basis of common inputs.

Analysis: The product emerging in the course of manufacture was treated as press mud, a waste product, and the appellate authority found that the demand travelled beyond the show cause notice by referring to enriched press mud/biocompost. The Tribunal noted that the issue was covered by earlier decisions holding press mud to be non-marketable and non-excisable, and that biocompost prepared by mixing press mud with distillery effluents was also not excisable. In that view, the provision requiring reversal in respect of dutiable and exempted goods was held inapplicable.

Conclusion: The demand could not be sustained, and the assessee was entitled to succeed.

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