1999 (10) TMI 332 - AT - Central Excise

Summary

Issues:
1. Classification of bagasse as a final product for Central Excise duty under Rule 57CC.
2. Applicability of Rule 57CC to demand Central Excise duty on bagasse.
3. Prima facie case for waiver of pre-deposit of duty and penalty on bagasse.

Analysis:

1. Classification of Bagasse:
The case involves manufacturers of V.P. sugar availing Modvat credit for Central Excise duty paid on inputs. The Department sought to treat bagasse, generated at the stage of juice extraction from sugarcane, as a final product and levy duty under Rule 57CC. The Commissioner (Appeals) upheld this view, considering bagasse marketable. However, the Tribunal disagreed, stating that bagasse did not involve inputs attracting Modvat credit, thus not justifying Rule 57CC application.

2. Applicability of Rule 57CC:
The Tribunal referenced a similar case involving press-mud, where the Tribunal granted a stay as press-mud was not deemed a final product under Rule 57CC. Drawing parallels, the Tribunal found bagasse, like press-mud, not meeting the criteria for Rule 57CC. As no inputs were used in bagasse generation, the Tribunal ruled in favor of the appellants, ordering a complete waiver of pre-deposit and stay on recovery proceedings until appeal disposal.

3. Prima Facie Case for Waiver:
Considering the absence of inputs in bagasse production, the Tribunal found a strong case for the appellants to warrant a complete waiver of the duty demanded and penalty imposed. Citing the precedent set in the press-mud case, the Tribunal deemed bagasse not a final product under Rule 57CC. Consequently, the Tribunal granted the waiver and stayed recovery proceedings pending appeal resolution, aligning with the appellants' arguments and the lack of input usage in bagasse generation.