2018 (8) TMI 160

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....re arises as a by product, which is being sold by the assessee against consideration. As bio-manure is chargeable to nil rate of duty, the Revenue entertained a view that they are required to pay an amount of 6% of the value of the same in terms of the provisions of Rule 6(3)(1) of Cenvat Credit Rules, 2004, inasmuch as they have availed Cenvat credit in respect of common inputs and input services. 3. Accordingly, proceedings were initiated against them by way of a show cause notice dated 01/04/2016, raising demand of Rs. 99,451/- (Ninety nine thousands four hundred fifty one) in respect of bio manure, cleared by the appellant during the period April, 2015 to November, 2015. By taking into consideration the amended provisions of Rule 6(1....

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....nsideration from the factory." By reference to the same, Commissioner (Appeals) has observed as under:-  "It is seen that by virtue of amendment brought out in the above rule vide Explanation-1 ibid w.e.f. 01.03.2015, the non-excisable goods or goods chargeable to Nil Rate of duty also came within the purview of exempted goods for the purpose of reversal of amount at the appropriate rate. In other words, Nil rated goods such as Bio Manure, classifiable under Tariff sub-heading No.23032000, which were out of purview of Rule 6(1) ibid prior to 01.03.2015, had been covered under this Rule on or after 01.03.2015 for the purpose of reversal of amount. Undoubtedly, the Hon'ble Supreme Court in the case of Union of India vs. DSCL Sugar ....

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....input services, in terms of Rule 6 of CENVAT Credit Rules, 2004." 5. As is seen from above, Revenue has strongly relied upon the explanation to Rule 6(1). However, it is seen that Rule 6(1) stand amended so as to include the inputs used in relation to the manufacture of exempted goods. As such, it can be seen that the same relates to the manufacture and it can be safely concluded that there has to be a manufacturing activity for invoking Rule 6(3). The Hon'ble Supreme Court in the case of Union of India vs. D.S.C.L Sugar Ltd. 2015 (322) E.L.T. 769 (S.C.) has held that bagasse being an agricultural waste or residue, there could be no manufacturing activity. Similarly bio manure is nothing but a byproduct which necessarily arises during th....