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2020 (2) TMI 1197 - CESTAT MUMBAICENVAT Credit - common input services for taxable as well as exempt goods - pressmud (a waste) - whether after the amendment to Rule 6(1) of Cenvat Credit Rules, 2004 vide notification dated 1.3.2015, pressmud (a waste) generated during the manufacturing of sugar, falls within the ambit of Rule 6 ibid and any amount is recoverable from the Appellant on clearing the said pressmud for consideration as the Appellant is not maintaining separate accounts? HELD THAT:- Hon’ble Supreme Court in the matter of UOI vs. D.S.C.L. Sugar Ltd. [2015 (10) TMI 566 - SUPREME COURT] has laid down that that pressmud is agricultural waste of sugarcane and the waste and residue of agricultural product, during the process of manufacture of goods cannot be said to be result of any process. There is no manufacturing process involved in pressmud’s production. “Bagasse, pressmud and composed fertilizer” is not ‘goods’ but merely a waste or byproduct therefore Rule 6 of the Cenvat Rules shall have no application in the present case and they are bound to come into existence during the crushing of the sugarcane and are an unavoidable agricultural waste. The amendment dated 1.3.2015 in Rule 6 CCR has wrongly been relied upon by the authorities below in coming to the conclusion that the assessee is liable to reverse the Cenvat Credit availed by them. As per Rule 6(1) ibid read with Explanation-1, non-excisable goods which are manufactured by the manufacturer in his factory will get covered under Rule 6(1) and those goods which were not manufactured, like pressmud in these appeals, will not be covered under Rule 6 despite being non-excisable goods because pressmud is not being manufactured in the factory but it emerged as agricultural waste or residue. It is seen that Rule 6(1) was amended in order to include the inputs used in relation to the manufacture of exempted goods. As such it can be seen that the same relates to the manufacture and it can safely be concluded that there has to be a manufacturing activity for invoking the aforesaid Rule. The Hon’ble Supreme Court in the matter of D.S.C.L. Sugar Ltd. has laid down that bagasse being an agricultural waste or residue, there could be no manufacturing activity. If that is so and if pressmud is also not manufactured, the same cannot be held to be excisable, in which case the amendment which has been relied upon by the authorities below as well as by the Revenue, would not apply. In all the decisions of the Tribunal which were cited by the learned counsel, a consistent view has been taken that ‘bagasse/pressmud’ which emerges as a waste/by-product, falls outside the scope of Rule 6 ibid. Even after amendment to Rule 6 ibid, pressmud which emerges as a waste/ by-product, falls outside the scope of the said Rule - Appeal allowed - decided in favor of appellant.
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