TaxTMI 
TaxTMI 
2026 (2) TMI 1270
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....i Limited are being reproduced. The appellant is engaged in the manufacture of excisable goods viz. VP Sugar falling under Chapter Heading 1701 of Schedule to the Central Excise Tariff Act, 1985 from main raw material 'Sugar Cane' and other processing chemicals. During the course of such manufacture of VP Sugar, waste of crushed sugar cane / by-products namely Bio-compost and press mud falling under Tariff Item 23032000 of Schedule to the Central Excise Tariff Act, 1985 attracting 'Nil' rate of duty are generated, and which are cleared to farmers on money consideration. 2.1 An amendment in clause (d) of Section 2 of the Central Excise Act, 1944 effective from 10.05.2008 was carried out. As per the amendment and the Board's Circular No. 904/24/2009-CX dated 28.10.2009 it was clarified that Bio-compost, bagasse, press mud, aluminum/zine dross and other such products termed as waste, residue or refuse which arise during the course of manufacture and are capable of being sold for consideration would be excisable goods and chargeable to payment of excise duty. It is further clarified that in case the rate of duty in respect of such products is Nil in the tariff or they are ex....
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....he issue before this Tribunal is whether the appellant can be directed to reverse proportionate Cenvat credit or to pay 5% of the amount on the ground that Cenvat credit was availed by the appellant on inputs which were used in the dutiable final products viz. VP Sugar as well as exempted goods viz. bio-compost, bagasse, press-mud etc. in terms of Rule 6 of Cenvat Credit Rules, 2004. 3.1 Shri Devashish K. Trivedi, learned Counsel for the appellant submitted that the issue is well settled in favour of the appellant vide judgment pronounced in Bajaj Hindustan Limited vs. Commissioner of Central Excise, Meerut-I - 2013 (290) ELT 251 (Tri. Del.) in which it has been held that bagasse emerges in the course of crushing of sugarcane and press mud emerges during the course of manufacture of molasses as an inevitable product. Thus, keeping in mind that the appellant is engaged in manufacture of sugar and molasses and in this process the waste products i.e. bagasse and press mud are generated, it cannot be said that the appellant possibly could have maintained separate account for inputs for production of excisable items sugar and molasses and exempted items i.e. bagasse and press mud. Th....
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.... are excisable goods after the amendment in the definition of excisable goods affected by the Budget, 2008. 4.1 The learned AR further submitted in Appeal No. E/10670/2013 that bagasse and press-mud arising during the course of manufacture of excisable goods viz. Sugar cannot be considered to be excisable goods prior to amendment in section 2(d) of the Central Excise Act, 1944, effective from 10.05.2008. Therefore, the demand/ recovery of an amount equivalent to 10% or 5% of value of exempted goods i.e. bio-compost cleared during the period from January 2006 to August 2010 and Press Mud cleared during the period from May 2008 to August 2010, only is sustainable. He submits that the Adjudicating Authority has correctly confirmed the duty demand after recording his findings in respect of product viz. bio-compost cleared during the period from January 2006 to August 2010 and press-mud cleared during the period from May 2008 to August 2010. 4.2 The learned AR has also cited the case of Hindalco Industries Limited vs. UOI - 2009 (243) ELT 481 (All.) in which the Hon'ble Allahabad High Court has held that insertion of Explanation to Section 2(d) of the Central Excise Act provid....
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....se and press mud are generated, it cannot be said that the appellant possibly could have maintained separate account for inputs for production of excisable items sugar and molasses and exempted items i.e. bagasse and press mud. Thus, the amendment in Finance Act, and the boards circular would not make any difference so far as the plea of assessee is concerned. The Tribunal further observed that otherwise also it may be noted that Hon'ble Allahabad High Court vide its judgement dated 18.05.2022 in a bunch of Writ Petition including Writ Petition No. 11791 (M.B.) of 2010 titled Balarampur Chinni Mills & Ors vs. Union of India & Ors., has held that bagasse generated in the course of crushing of sugarcane is not excisable item notwithstanding the amendment of section 2(d) of Central Excise Act, 1944 vide Finance Act, 2008 which became operative with effect from 10.05.2008. Vide aforesaid judgment, Hon'ble Allahabad High Court has also quashed the Board Circular referred to by the learned AR. Since press-mud is also an inevitable waste generated during manufacture of molasses the ratio of judgement of Allahabad High Court is squarely applicable in respect of press mud which is t....
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.... upheld the findings recorded by the Tribunal that reversal of 8% under Rule 57CC is not applicable as 'Bagasse' is not a final product, but it is a waste. It is worthwhile to mention here that in the judgment dated 22-11-2004 of Tribunal, it was specifically referred in para 2 that the appeal filed by the Commissioner, Central Excise in the case of CCE v. M/s. Kicha Sugar Co. Limited was dismissed by Hon'ble Supreme Court on 20-2-2004. 25. As held by the Apex Court, bagasse is not a manufactured goods and it is never manufactured, but it only emerges in the process of final product, namely, sugar. Bagasse being not a manufactured goods and being a waste, hence Rules 6(2) and 6(3) are not applicable. 26. Section 2(d), as amended by Finance Act, 2008, w.e.f. 13-5-2008, is reproduced as under :- "excisable goods" means goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt; Explanation. - For the purposes of this clause, "goods" includes any article, material or substance which is capable of being bought and sold for a consideration and ....
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....f Central Excise v. Balrampur Chini Mills, Gonda, decided on 21-7-2010, the Circular of the Chief Commissioner, Central Excise, Lucknow as well as Circular of Central Board of Excise and Customs are liable to be quashed which is the basis for issuing the demand. 31. In the impugned notice dated 27-9-2010, it has been mentioned that as per Rule 6 of the Cenvat credit is availed on the inputs which are used in the manufacture of both dutiable and final products, then an amount equal to 10% (upto 6th July, 2009) or 5% (w.e.f. 7-7-2009) of the sale value of exempted final products is required to be paid. Therefore, neither the penalty nor the interest can be charged from the petitioners, in view of the fact that the petitioners are not liable to duty either by payment or by reversal in respect of bagasse sold by the petitioner. As the petitioners have paid the entire duty and interest under protest, the entire deposited amount shall return to them. 32. In view of above discussion, all the writ petitions are allowed and impugned Circular dated 28-10-2009, issued by the Central Board of Excise and Customs, the Circular dated 3-10-2009, issued by the Central Excise, U.P.....
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....ircular No. 1027/15/2016-CX dated 25.04.2016 was issued highlighting that Bagasse, Dross and Skimmings of non-ferrous metals or any such byproduct or waste, which are non-excisable goods and are cleared for a consideration from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and input services, in terms of rule 6 of the CENVAT Credit Rules, 2004. This circular was issued in the background of judgement of the Hon'ble Supreme Court in the case of Union of India Vs. M/s. DSCL Sugar Ltd [2015 (322) E.L.T. 769 (S.C.)] holding that Bagasse is only an agricultural waste and residue and it is not a result of any process which can be termed as manufacture', Similar conclusion was also drawn by the Hon'ble High Court of Bombay in the case of M/s Hindalco Industries Ltd. Vs. Union of India (2015 (315) E.L.T.10 (Bom.)] in relation to dross and skimming of aluminium, zinc or other nonferrous metals. 4. The issue again came before the Hon'ble Supreme court in the case of Union of India Vs. M/s. Indian Sucrose Limited [SLP (C) No. 1700/2021], wherein the Hon'ble Supreme Court vide its judgement dated 04.03.2022, referred t....