TaxTMI 
TaxTMI 
2012 (8) TMI 1005
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.... 1. Heard both sides 2. The appellants filed this application for waiver of pre-deposit of duty, interest and penalty. The applicant is engaged in the activity of manufacture of sugar and molasses. The waste obtained during the manufacture of sugar are referred as bagasse and press mud. The Revenue is of the view that the applicant availed credit in respect of common inputs and input service in the manufacture of final product cleared on payment of duty and in respect of the goods which are cleared without payment of duty and are not maintaining separate account therefore, the applicant is liable to pay appropriate duty as provided in CENVAT Credit Rules, 2004, on the price of bagasse and press mud and the demands are confirmed. 3. T....
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..... 23032000 of the Tariff. The Revenue also relied upon the decision in the case of Commissioner of Income Tax vs. N.C. Budhraja and Co. - AIR 1993 SC 2529 to submit that the word "produce" or "manufacture" has to be understood in the normal connotation the sense in which it is understood in commercial world. It is equally well to keep in mind the context since a word takes its colour from the context. The word 'articles' is preceded by words it has begun or begins to manufacture or produce". It also takes in the bye-product which emerges in the course of manufacture of goods. The contention of the Revenue is that as bagasse and press mud is produced during the manufacture of sugar and molasses and therefore, it cannot be said that t....
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....uct, but it is a residue/waste and the demand by invoking the provisions of Rule 6 is not sustainable. Further, we find that the Tribunal in the case of Indian Potash Ltd. (supra) after taking into consideration the decision of the Hon'ble Supreme Court in the case of Shakumbhari Sugar and Allied Industries Ltd., also taken the same view and held as under:- "6. We have considered the rival submissions. We find that bagasse emerges in course of crushing of sugarcane. It may be noted that crushing of sugarcane is necessary to extract can sugar juice which in turn is processed for production of sugar and molasses. Bagasse is the waste product left after the crushing of sugarcane. Therefore, by no stretch of imagination it can be said th....
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....ly under Central Excise Tariff Heading 2303 20 00 and 2303 30 00. Regarding such classification there is no dispute raised by either side. However, against the entries in both these Headings, the duty amounts specified is nil. The Explanation to Section 2(d) is a deeming clause which renders any goods which are capable of being bought and sold for a consideration to be marketable. The cited decision of the Hon'ble Allahabad High Court in the case of Hindalco Industries (supra) is also to this effect. This deeming fiction became necessary to be created in the light of various judgments that merely because some goods are sold they cannot be held to be marketable and consequently they cannot be considered to be excisable as 'excisabili....
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....ty. As per this definition, the impugned goods namely press mud and sludge would be covered under the definition "exempted goods", though the same cannot be treated as 'excisable goods" for the reasons stated in paragraph 5 above. The question raised in this case is whether in terms of Rule 6(3)(i), an amount equal to 10% / 5% would be payable on such goods. While considering this question, I take note of the fact that these goods are definitely in the nature of by-product and waste. In the cited decision in Rallies India (supra), the Hon'ble Bombay High Court, reversing the earlier decision of the Larger Bench of the Tribunal, has held that when common inputs are used in manufacture of dutiable and exempted products, the liability ....