By TIOL News Service

MUMBAI, FEB 14, 2013: THE assessee is engaged in the activity of manufacture of sugar and molasses. Waste is obtained during the manufacture of sugar and is referred as Bagasse and press mud which is cleared from the factory without payment of any Central Excise duty.

The jurisdictional authorities are of the view that since the assessee has availed CENVAT credit in respect of common Inputs and Input service in the manufacture of final products which are cleared on payment of duty and in respect of the Bagasse/Press mud they are not maintaining separate account, therefore, they are liable to pay an amount of 5%/10% on the price of Bagasse/Press Mud as provided in Rule 6 of the CENVAT Credit Rules, 2004.

The demands were confirmed by the lower authorities and hence the appellant is before the CESTAT with a Stay application/appeal.

It is submitted that Bagasse and Press Mud are waste and also non-excisable and cannot be regarded as a final product exempted from duty so as to call for payment of any amount under rule 6 of the CCR, 2004. Following decisions were relied upon to support their stand - Balrampur Chini Mills Ltd. vs. Union of India and Others in Writ Petition No. 11791 (M/B) of 2010 order dated 18.5.2012 of Allahabad High Court relying upon the SC decision in CCE Vs. Shakumbhari Sugar & Allied Industries Ltd. Indian Potash Ltd. (2012-TIOL-1402-CESTAT-DEL) & Amaravathi Co-Operative Sugar Mills Ltd. (2012-TIOL-937-CESTAT-MAD).

The Revenue representative submitted that in the Central Excise Tariff bagasse is specifically mentioned and attracting nil rate of duty and Press mud is also excisable goods and the same are classifiable under Ch. Hdg. 2303 20 00 of the Tariff. Reliance is also placed on the decision in Commissioner of Income Tax vs. N.C.Budharaja & Co. - AIR 1993 SC 2529 to submit that the word "produce" or "manufacture" has to be understood in the normal connotation, the sense in which it is understood in commercial world.

The Bench noted that the issue is settled in view of the decisions cited by the appellant and after extracting the orders of the CESTAT in the case of Indian Potash Ltd. (supra) and Amaravathi Co-operative Sugar Mills Ltd. (supra) observed -

"7. We find that Hon'ble Supreme Court decision in the case of Commissioner of Income Tax vs. N.C.Budharraja & Co. is not applicable in the facts of present case as the Hon'ble Supreme Court was interpreting the provisions of Income Tax which are not parallel to the provisions of Central Excise Act and Rules.

8. We find no reason to take contrary view as the issue involved in the subject is already decided by the above mentioned decisions. Hence, the impugned order is set aside after waiving the pre-deposit of dues and the appeal is allowed."

(See 2013-TIOL-288-CESTAT-MUM)