2013 (1) TMI 613

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....ss of manufacture, bagasse is produced as a by-product which falls under Chapter sub-heading no. 2303 20 00 of the Central Excise Tariff Act and attracts nil rate of duty. The appellant was availing Cenvat credit in respect of the excise duty paid on inputs used in or in relation to manufacture of the final products. The appellant during the period Sept. 2009 to July 2010 cleared baggase without payment of duty and did not declare the sale in his ER-1 Returns. The department was of the view that since baggase was manufactured by the appellant, he was required to pay excise duty in accordance with Rule 6 of the Cenvat Credit Rules, 2004. Accordingly, a show cause notice dated 23-9-2010 was issued to the appellant. The Adjudicating Authority ....

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....nitial stage of crushing of sugarcane for extracting the juice. The sugarcane being agricultural produce is not subject to excise duty and the appellant did not avail Cenvat credit on the freight charges of sugarcane to the factory. Thus, it is contended that in respect of process of extracting juice from sugarcane, which generated baggase, no Cenvat credit was availed by the appellant and Rule 6 of the Cenvat Credit Rules is not attracted in this case. Ld. Counsel further submits that otherwise also, the finding of the Adjudicating Authority which is confirmed by the Appellate Authority is based on unwarranted assumption and not on cogent evidence. Thus, ld. Counsel has summed-up that the impugned order is not sustainable in law and liable....

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....s and their clearance upto the place of removal or for provision of exempted service except in the circumstances mentioned in sub-rule (2). Provided that the CENVAT credit on inputs shall not denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall mainta....

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....msp;pay an amount as determined under sub-rule (3A) or (iii) ---------------------------------------------------------------------" 8. On bare reading of above rules, it is apparent that above referred rule shall be attracted only in a situation where manufacturer has availed Cenvat credit in respect of inputs which are used for or in relation to manufacture of final products. Thus, before confirming the demand, under Rule 6(3) (i) & 6(3)(ii), the department is required to establish that some Cenvat credit was availed by the appellant in respect of inputs which were used for the production of bagasse at the first stage of manufacture i.e. crushing of sugar cane to extract juice. We have gone through show cause notice wherein it ....