By TIOL News Service

MUMBAI, AUG 30, 2016: THE appellant is in appeal against an order demanding:

(i) Reversal of an amount equal to 10% or 5% on the value of exempted goods, viz., bagasse, press mud and boiler ash and compost under Rule 6 of the CCR, 2004.

(ii) Reversal of credit on the inputs used for fabrication of biogas digester tank, which is exempted capital goods under Sl. No. 15 of list 5 of Sl. No. 84 of Notification No. 06/2006-CE dated 01/03/2006.

The appellant submitted that in respect of bagasse, press mud ash and compost, etc. no demand can arise in view of the decision in BalrampurChini Mills Ltd. - 2004-TIOL-1030-CESTAT-DELand which is affirmed by the Apex Court. As regards the demand for reversal of credit on HR sheets used for fabrication of biogas digester tank, while arguing that the order travels beyond the show-cause notice it is also submitted that in view of the decision in KCP Ltd. - 2008-TIOL-2531-CESTAT-BANGthe credit is admissible.

The AR reiterated the findings of the impugned order.

The Bench observed that,

++ The issue regarding the reversal of amount under Rule 6 of the Cenvat Credit Rules, in respect of clearance of bagasse, press mud, etc. is squarely covered by the decision of the Tribunal in the case of BalrampurChini Mills Ltd. ( supra ) (which has been affirmed by the Hon'ble Apex Court). In view of the above, the demand in respect of reversal of amount under Rule 6 of the Cenvat Credit Rules, against clearance of bagasse, press mud, etc. is set aside.

++ Insofar as the demand on the HR sheets used for manufacture of biogas storage tank is concerned it is seen that biogas tank is a part of biogas plant. Biogas plant is covered under list 5 attached to the Notification No. 6/2006 dated 01/03/2006. Parts of biogas plant also are covered under Sl.No.21 of the list 5. In view of the above, it is apparent that biogas storage tank is exempted under Notification No. 6/2006 dated 01/03/2006. The said tank is also exempted under Notification No. 67/95. The term input is defined under Cenvat Credit Rules, under Rule 2 (k) explanation to the said Rules reads as under:

Explanation 2: Input includes goods used in the manufacture of capital goods, which are further used in the factory of the manufacturer but shall not include cement, angles, channels, Centrally Twisted Deform bar (CTD) or Thermo Mechanically Treated bar (TMT) and other items used for construction of factory shed, building or laying of foundation or making of structures for support of capital goods.

++ The appellants have claimed that in view of the explanation, the HR sheets used for the manufacture of biogas storage tank would be admissible. In the instant case the inputs, namely, HR sheets are used for manufacture of biogas storage tank which is exempted under Notification 6/2006 dated 01/03/2006. The appellants have relied on the decision of the Tribunal in the case of KCP Ltd. (supra) - 2008-TIOL-2531-CESTAT-BANG. I find the present situation is similar to one in the case of KCP Ltd. (supra).

The appeal was allowed.

(See 2016-TIOL-2233-CESTAT-MUM)