2016 (12) TMI 652

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....ring the process of manufacture of final product, the by-products namely press-mud, bio-compost and bagasse are generated. It has been alleged that the respondent neither maintained separate accounts of said goods nor reflected, clearance and value of said goods in their ER-1 Returns during the period 2006-07 to 2010-2011. It is the case of the department that the production/clearance and value of these goods i.e. bagasse, press-mud, bio-compost (Jaivik Khad) were not reflected in the ER-1 Returns nor the respondents paid an amount equal to appropriate rate of exempted goods despite availment of cenvat credit on common inputs and input services during the aforesaid period, as per Rule 6(2) of Cenvat Credit Rules, 2004. The respondents had n....

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....ts herein are manufacturer of sugarcane and molasses falling under Chapter sub-heading 1701 11 90 and 1703 10 00 respectively, of the First Schedule to the Central Excise Tariff Act, 1985. In the process of manufacture of sugar, sugarcane is crushed, its juice is extracted and Bagasse emerges as residue/waste of sugarcane. 4. It is not in dispute that Bagasse is otherwise classified under Chapter sub-heading No. 2303 20 00 of the First Schedule to the Central Excise Tariff Act, 1985 and attracts nil rate of duty. 5. However, show cause notices were issued to the respondents herein stating that Bagasse would be subject to duty under the Central Excise Act, 1944, as "other products". These show cause notices were issued to the respondents....

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....eemed to be marketable. Thus, it introduce the deeming fiction by which certain kind of goods are treated as marketable and thus excisable. 8. However, before the aforesaid fiction is to be applied, it is necessary that the process should fall within the definition of "manufacture" as contained in Section 2(f) of the Act. The relevant portion of amended Section 2(f) reads as under : Section 2(f) - manufacture includes any process - (i) incidental or ancillary to be completion of a manufactured product; (ii) which is specified in relation to any goods in the section or Chapter notes of [The First Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to [manufacture; or] (iii) which in relation to the goods spec....