TaxTMI 
TaxTMI 
2023 (10) TMI 876
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.... CENVAT Credit Rules, 2004 inasmuch as they did not maintain separate accounts for the common input services used in the manufacture of both dutiable and exempted products. The appellants were clearing the bagasse and pressmud (exempted products), which emerged during the manufacture of the final product viz., sugar. 2. The Department was of the view that for the period from 01.10.2014 to 31.07.2015, the appellant has to pay an amount of 6% of the value of exempted products (bagasse / pressmud) in view of Rule 6(3)(i) of the CENVAT Credit Rules, as amended. 3. Show Cause Notice Sl. No. 33/2015 C.Ex. dated 21.04.2015 came to be issued to the appellant proposing to demand 6% of the value of exempted products along with interest and for impo....
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....s challenged before the Hon'ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd. v. Union of India [2019 (368) E.L.T. 276 (All.)] and the Hon'ble High Court had quashed the said Circular; it was also observed by the Hon'ble High Court that though the Explanation states that non-excisable goods are to be treated as exempted goods, it cannot be construed that bagasse/pressmud are manufactured by an assessee. As per Rule 6(1), the credit is to be reversed on exempted goods manufactured by an assessee. 6.3 He would also contend that the very same decision of the Hon'ble High Court was followed by the Tribunal in the case of Khedut Sahakari Khand Udyog Mandli Ltd. v. Commissioner of Central Excise and Service Tax, Vadodara-II [....
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.... as under: - "27. After the aforesaid judgment which has clearly held Bagasse not to be a manufactured product, and therefore Rule 6 of the Cenvat Credit Rules, 2004 shall have no application, Section 6(1) has been amended by inserting the 2 Explanations, which the respondent contends is sufficient to include Bagasse within the fold of Section 6, and further to justify the stand for a reversal of Cenvat Credit Rules, 2004. 28. A perusal of the Explanation 1 to Rule 6 would indicate that it provides that the exempted goods and final product as defined in Clauses (d) & (h) of Rule 2 shall include non-excisable goods cleared for a consideration from the factory. 29. Explanation 1, talks about the inclusion of non-excisable goods cleared ....
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....ds, as mentioned in the impugned circular. 33. That the Circular dated 25-4-2016 interpreting Explanation 1 to Rule 6 has provided that "consequently, Bagasse, dross and skimmings of non-ferrous metal or any such by-product of waste, which are non-excisable goods and are cleared for consideration from the factory need to be treated like exempted goods for purpose of reversal of credit of input and input services, in terms of Rule 6 of the Cenvat Credit Rules, 2004. The circular therefore treating Bagasse to be a non-excisable goods, is clearly erroneous, and for this reason also the Circular dated 25-4-2016 is liable to be quashed with regard to Bagasse. 34. In light of the above we are of the considered opinion that in absence of Bagas....