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TMI Blog2012 (5) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... l goods, inputs and input service. In the process of manufacture of V.P. Sugar and Molasses, first step is extraction of juice of sugar cane. This extraction of process generate waste products namely bagasse and press mud which are classified under Central Excise Tariff Act with nil rate of excise duty. The appellant during the period from 10-5-2002 to July, 2009 cleared bagasse as also press mud on payment but did not proportionately reverse the Cenvat credit availed by him. The department was of the view that since bagasse as also press mud are generated in the process of manufacture. The appellant ought to have made proportionate reversal of Cenvat credit of inputs in accordance with Rule 6 of Cenvat Credit Rules. Accordingly, show cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of sugar cane to the factory. Thus, it is contended that in the process of extraction of juice from sugar cane which generated bagasse and press mud no Cenvat credit was availed by the appellant. As such, there is no question of reversal of proportionate Cenvat credit and that Rule 6 of Cenvat Credit Rules, 2004 is not attracted in this case. Learned Counsel for the appellant further submitted that the adjudicating authority as well as appellate authority has failed to appreciate that bagasse and press mud are inevitable waste products and not the products produced through process of manufacture. As such, those are not excisable goods, sale of which may entail reversal of proportionate Cenvat credit under Rule 6. 4. Learned AR for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of exempted goods and their clearance upto the place of removal or for provision of exempted service except in the circumstances mentioned in sub-rule (2) : Provided that the CENVAT credit on inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule. (2) Where a manufacturer or provider of output service avails of CENVAT credit in respect of any inputs or input services and manufactures such final products or provides such output service which are chargeable to duty or tax as well as exempted goods or services, then, the manufacturer or pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount equal to six per cent of value of the exempted goods and exempted services; or (ii) pay an amount as determined under sub-rule (3A) or (iii) -----------------------------------------------------------------------" 7. On bare reading of above rules, it is apparent above referred rule shall be attracted only in a situation where manufacturer has availed Cenvat credit in respect of inputs which are used for or in relation to manufacture of final products. Thus, before confirming the demand under Rules 6(3)(i) & 6(3)(ii), the department is required to establish that some Cenvat credit was availed by the appellant in respect of inputs which were used for the production of bagasse at the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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