TaxTMI 
TaxTMI 
2025 (8) TMI 710
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....AT Credit Rules, 2004. 2. The appellants are engaged in the manufacture of sugar and molasses, bagasse and press mud are generated in the process. Revenue issued a show cause notices, dated 20.09.2013, 13.10.2014, 01.05.2015, 26.04.2016, various amounts specified therein, covering the period 01.04.2012 to 31.03.2016. In view of the explanation inserted in Rule 6(1) of CENVAT Credit Rules, 2004 w.e.f. 01.03.2015, vide Notification No.6/2015-CE (NT) dated 01.03.2015, deeming that bagasse and press mud are excisable products for the purpose of Rule 6 of CENVAT Credit Rules, 2004, the original authority confirmed the demand of Rs.24,84,657/- for the period after 01.03.2015. On an appeal filed by the appellants, Commissioner (Appeals) vide Or....
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....t credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods or for exempted services, except in the circumstances mentioned in sub-clause (2). (2) Where a manufacturer or provider of output service avails of Cenvat credit in respect of any inputs or input services, and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or provider of output service shall maintain separate 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 inpu....
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.... 21. A perusal of Rule 6(1) clearly shows that the manufacturer has to manufacture dutiable goods as well as exempted goods. Since Bagasse is not manufactured goods but the waste product which emerges/comes into existence in the process of manufacture of sugar, and therefore the production of Bagasse cannot be held to be manufacture of exempted goods. 22. Rule 6(2) provides that where a manufacturer avails of Cenvat credit in respect of any inputs and manufactures such final products which are chargeable to duty as well as exempted goods, the manufacturer shall maintain separate accounts for the same, and in an inventory of input meant for use in the manufacture of dutiable final product and the quantity of input meant for the use ....
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....anufacture 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 right....
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.... to be an exempted goods, but cannot result in Bagasse being manufactured goods, as the nature of Bagasse remains that of an agricultural waste and residue and is not in effect a product. This aspect and character of Bagasse remains unaltered by insertion of Explanation 1. 32. In absence of Bagasse being a manufactured final product, the obligation of a reversal of Cenvat period under Rule 6(1) of the Cenvat Credit Rules, 2004 is not attracted. It has also been noticed that Bagasse has always been an "exempted goods" under Rule 2(d) of the Cenvat Credit Rules, 2004. It has been mentioned in Central Excise Tariff Heading 2303 20 000 and was subjected to NIL rate of duty. It therefore, fell within the definition of "exempted goods" a....