AI Drafter 
TaxTMI 
TaxTMI 
2024 (5) TMI 1191
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....gainst the impugned Order-in-Original No 10-13/AC/D-SML/2020-21 dated 30.09.2020 passed in the case of M/s SBEC Sugar Ltd. Village- Malakpur, Baraut, Baghpat (U.P.) is rejected." 2.1 Respondents are engaged in manufacture of excisable goods namely sugar, molasses, ethyl alcohol/ rectified spirit, denatured ethyl alcohol & Fusal oil. They are also availing the CENVAT Credit of the duties/ taxes paid on inputs, capital goods and input services. 2.2 A show cause notices as detailed below were issued to the respondent for the demand and recovery of amount payable in terms of Rule 6 of the CENVAT Credit Rules, 2004, in respect of the clearances/ sale of Bagasse and Press Mud for the period December , 2016 to June, 2017. S No Show Cause Notice Amount 'Rs Number Date Period 1 V(30)/Adj/CEx/D- SML/SBEC/94/18/736 14.11.2018 Dec 16 to Jan 17 42,20,769/- 2 V(30)/Adj/CEx/D- SML/SBEC/143/18/844 01.01.2019 Feb 17 24,89,608/- 3 V(30)/Adj/CEx/D- SML/SBEC/175/18-19/957 29.03.2019 Mar 17 25,34269/- 4 ....
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....puts and input services used in the manufacture of exempted goods namely Bagasse & Press-Mud during the relevant period. Thus, they were required to choose any of the options given in Rule 6(3) of CENVAT Credit Rules, 2004 prevailing during the relevant period. However, the said party neither paid an amount equal to 6% of the value of exempted goods nor reversed proportionate credit attributable to inputs/input services used for the manufacture of exempted goods as envisaged under the said Rule 6(3) of CENVAT Credit Rules, 2004. 3. Rule 6 of the CENVAT Credit Rules, 2004 was amended vide Notification No.6/2015-CE(NT) dated 01.03.2015 in as much as in sub-rule (1), after the proviso, the following Explanations were inserted, namely:- "Explanation-1 For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non- excisable goods cleared for a consideration from the factory. Explanation-2 Value of non-excisable goods for the purposes of this rule, shall be the invoice value and where such invoice value is not available, such value shall be determined by using reasonable means consistent with the p....
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....d counsel for the petitioner, we allow this writ petition in the same terms as the above judgment with liberty to the Revenue to file an application for review in case the assertion regarding the judgment having been permitted to become final is not correct". In respect of the said Order dated 04.03.2020 the Department has filed SLP (C) [No. 001700/2021; Diary No. 585/2021] in the Hon'ble Supreme Court. 7. The instant appeal is being filed in terms of Para 4 of CBEC's Instruction bearing F. No. 390/Misc./116/2017-JC dated 22-8-2019 read with Para 1.3 of CBEC's Instruction bearing F. No. 390/Misc/163/2010-JC dated 17.08.2011 wherein it has been stipulated and specified that: 1.3. Adverse judgments relating to the following should be contested irrespective of the amount involved: (a) Where the constitutional validity of the provisions of an Act or Rule is under challenge (b) Where Notification/ Instruction Order or Circular has been held illegal or ultra vires In the instant case, substantive question of law is involved in as much as Commissioner (Appeals) vides his Order-in-Appeal No.MRT/EXCUS/000/APPL-MRT/287/2020-21 dated 31....
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....ted 26.11.2018 (hereinafter referred to as the "OIA") in the respondent's own case and the appeal filed by the department against the OIA had already been rejected by the Hon'ble CESTAT vides its Final Order no. 71111/2019 dated 18.06.2019. Further, in a catena of cases, it had been consistently held that the provisions of Rule 6 of CCR were not applicable in the case of bagasse and press-mud which emerged during the process of manufacture of sugar. The issue of applicability of amended provisions of Rule 6 of the Rules, and Board's Circular No. 1027/15/2016-CX dated 25.04.2016 w.e.f. 01.03.2015 was no more open for decision in the present appeal. I also find that the appeal filed by the department against the judgement of the Hon'ble High Court, Allahabad in the case of Balrampur Chini Mills vs. UOI [ 2019 (368) E.L.T. 276 (All) had already been dismissed by the Hon'ble Apex Court on 21.01.2021. The adjudicating authority had, therefore, rightly dropped the demands. The appeal filed by the appellant department is, therefore, without any substance and merit." 4.3 In this regard, I find that Hon'ble Supreme Court in the case of UOI vs DSCL Sugars [2015 (32) EL....
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....te accounts for receipt, consumption and invertory of input and input service meant for use in the manufacture of dutiable final products or in providing output service and the quantity of input meant for use in the manufacture of exempted goods or services and take Cenvat credit only on that quantity of input or input service which is intended for use in the manufacture of dutiable goods or in providing output service on which service tax is payable. (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer of goods or the provider of output service, opting not to maintain separate accounts, shall follow either of the following options as applicable to him, namely :- (i) the manufacturer of the goods shall pay an amount equivalent to five per cent of the value of the exempted goods and the provider of output service shall pay an amount equal to six per cent of the value of the exempted services; or (ii) ............." 20. The Union of India amended Cenvat Credit Rules, 2004 with effect from 1-3-2015 by inserting [Explanations 1 and 2 in Rule 6(1), which reads as under :- "Explanation 1. - For the purposes of this....
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....aid 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." 26. The Hon'ble Supreme Court also considered the definition of "manufacture" as provided in Section 2(f) of the Act wherein there is a deeming provision a mounting to manufacture in respect of certain goods, and specifically with regard to Bagasse and held as under :- "In the present case it could not be pointed out as to whether any process in respect of Bagasse has been specified either in the section or in the chapter notice. In the absence thereof this deeming provision cannot be attracted. Otherwise, it is not in dispute that Bagasse is only an agricultural waste and residue, which itself is not the result of any process. Therefore, it cannot be treated as falling within the definition of section 2(f) of the Act and [in] the absence of manufacture, there cannot be any Excise duty. Since it is not a manufacture, Rule 6 of the Cenvat Credit Rules, 2004, shall have an application rightly held by the High Court." 27. After the aforesaid judgment which has clearly held Bagasse not to be a manufactured....