TMI Blog2023 (10) TMI 876X X X X Extracts X X X X X X X X Extracts X X X X ..... m 01.03.2015, the appellant has to reverse the credit or pay 6% of the value of the exempted products in case non-excisable goods are cleared for a consideration. The Board had also issued a Circular in line with the above Explanation. However, the said Circular came to be challenged before the Hon ble High Court of Allahabad in the case of Balrampur Chini Mills Ltd. [ 2019 (5) TMI 972 - ALLAHABAD HIGH COURT ] and the same was held to be invalid and quashed. The Tribunal in a recent decision in the case of Khedut Sahakari Khand Udyog Mandli Ltd. [ 2022 (4) TMI 1360 - CESTAT AHMEDABAD] has followed the above decision of the Hon ble Allahabad High Court to set aside the demand. The demand cannot sustain and requires to be set aside - A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 Shri M.N. Bharathi, Ld. Counsel, appeared and argued for the appellant. It is submitted by him that for the period prior to 01.03.2015, the issue stands covered by the decision of the Hon ble Apex Court in the case of Union of India v. DSCL Sugar Ltd. [2015 (322) E.L.T. 769 (S.C.)] wherein the Hon ble Apex Court has held that bagasse / pressmud cannot be considered as exempted goods as these are not manufactured by an assessee; consequent to the decision of the Hon ble Apex Court, an amendment was introduced in the CENVAT Credit Rules, 2004 with effect from 01.03.2015 by way of an Explanation, whereby it was provided that when non-excisable goods are cleared for a consideration, they have to be treated as exempted goods manufactured by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be allowed. 7. The Ld. Authorized Representative Shri Harendra Singh Pal appeared and argued for the Department. The findings in the impugned order were reiterated. 8. Heard both sides. 9. The issue involved in the present appeal is whether the appellant is liable to pay an amount equivalent to 6% of the value of the bagasse / pressmud cleared by them. 10. The Explanation 1 to Rule 6 of the CENVAT Credit Rules, which was inserted with effect from 01.03.2015, reads as under:- Explanation 1. - For the purposes of this rule, exempted goods or final products as defined in clauses (d) and (h) of rule 2 shall include non-excisable goods cleared for a consideration from the factory. 11. In terms of the above Explanation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be treated like exempted goods for the purpose of a reversal of input and Input service. 30. As noted by the Hon ble Supreme Court in the case of Union of India and Others v. M/s. DSCL Sugar Ltd. and Others (supra) specifically in the context of Bagasse, Rule 6 applies only when there is a manufacture of final products or of exempted products, and if there is no manufacture, Rule 6 of the Cenvat Credit Rules, 2004, has no application. 31. This amendment may have the effect of treating Bagasse to be an exempted goods, but cannot result in Bagasse being manufactured goods, as the nature of Bagasse remains that of an agricultural waste and residue and is not in effect a product. This aspect and character of Bagasse remains unalter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment of the Hon ble Supreme Court in the case of Union of India and others v M/s. DSCL Sugar Ltd and Others (supra) still holds the field. Rule 6 of the Cenvat Credit Rules would have no application for reversal of Cenvat Credit in relation to Bagasse. The Circular No. 1027/15/2016-CX, dated 25-4-2016, contained in Annexure-1 to the writ petition to the extent that it includes Bagasse under the purview of the reversal of credit of input services in terms of Rule 6 of the Cenvat Credit Rules, 2004, as well as the impugned show cause notice dated 24-3-2017 contained in Annexure-2, are hereby quashed. 12. The Tribunal in a recent decision in the case of Khedut Sahakari Khand Udyog Mandli Ltd. (supra) has followed the above decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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