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2016 (6) TMI 992 - CESTAT BANGALORE

2016 (6) TMI 992 - CESTAT BANGALORE - TMI - Cenvat credit on inputs/inputs services - manufacture and clearance of sugar and molasses - part of electricity generated in their captive power plant has been sold - Held that:- the issue is squarely covered in favour of the appellant-assessee by various judgments cited supra wherein it has been consistently held that bagasse which is waste/by-product emerging during the course of crushing of sugarcane for manufacture of sugar could not be equated wit .....

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rder-in-original dated 08.11.2012, passed by the Deputy Commissioner of Central Excise, Gulbarga Division, Gulbarga. 2. Briefly the facts of the present case are that appellant is engaged in manufacture and clearance of sugar and molasses falling under Chapter 17 of the First Schedule to Central Excise Tariff Act, 1985. The appellant is availing Cenvat credit on inputs/inputs services under the provisions of Cenvat Credit Rules, 2004. The appellant was issued a Show-Cause Notice dated 1.5.2012 b .....

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thin the factory. 3. Show-cause notice was adjudicated by the Deputy Commissioner of Central Excise, wherein he has inter-alia held that during the course of manufacture of dutiable final products i.e. sugar and molasses in the appellants factory, bagasse emerges as by-product which in turn is used for generation of electricity in the factory; that electricity so generated was used in the manufacture of sugar and molasses and part of the same was sold to KPTCL; that as per Rule 6(1) of the Ce .....

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interest besides imposition of penalty of ₹ 25,000/- under the provisions of Rule 15(1) of the Cenvat Credit Rules, 2004. 4. Learned counsel for the appellant submitted that in the present case, inputs / inputs services on which Cenvat credit has been availed by the appellant were admittedly used for manufacture of sugar and molasses. The question of following procedure laid down under Rule 6 of Cenvat Credit Rules arises only in such cases where both dutiable and exempted final products a .....

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ubmission, he relied upon the judgement of Honble Allahabad High Court in case of Balrampur Chini Mills Ltd. Vs. Union of India [2014 (300) E.L.T. 372 (All.)] wherein it has been held by Honble High Court that bagasse emerging as waste/intermediary/by-product during the course of crushing of sugarcane for manufacture of sugar could not be equated with exempted goods and hence, as there was no manufacture of both dutiable as well as exempted goods, Rules 6(1), 6(2) and 6(3) of Cenvat Credit Rul .....

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l in factory for manufacture of final product and no specific input was used up to stage of emerging of bagasse; held bagasse was waste and hence, it was not manufacture of exempted goods; and also electricity was not classifiable under Chapter 27 of Central Excise Tariff which covered electrical energy generated from sources other than bagasse; electrical energy was neither excisable under Section 2(d) of Central Excise Act, 1944 nor exempted goods under Rule 2(d) of Cenvat Credit Rules, 2004. .....

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at bagasse is not the result of manufacture and this decision of CESTAT, Bangalore was affirmed by Hon ble High Court of Andhra Pradesh. He further submitted that similar view was taken by the Tribunal s Mumbai Bench in case of Sharad SSK Ltd. Vs. Commissioner [2015 (321) E.L.T. 468 (Tri.-Mumbai)] wherein the decision of Hon ble High Court in case of Balrampur Chini Mills (supra) was followed. He also submitted that similar view was taken by the Tribunal s Delhi Bench in case of Kumbh Chini Mill .....

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