TMI Blog2024 (5) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have no application for reversal of Cenvat Credit in relation to Bagasse.' - demand set aside. Reversal of CENVAT credit - Investment in shares - Exempt service or not - HELD THAT:- The appellant had invested in shares/securities that were giving dividend income but, however, we fail to understand as to what was service element involved in such investment. The revenue has only fastened the liability on surmises and without there being any positive findings in this regard. It was for the revenue to prove that investment itself was a service, in order to demand service tax. Rather, the first appellant authority himself has at paragraph No.14.01 observed that ''such investment would be an activity outside the definition of service, being a mere transaction in money'' but, however, has concluded in the same para that activity of investment in shares and derivative trade satisfy the definition exempted services under Cenvat Credit Rules, 2004. There are no logic in treating the mere investment as an exempted service because, the revenue has not specifically alleged if there is any service in the first place. Secondly, up to 01.07.2012, even if it is assumed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed nil rate of duty. It was the further the case of the revenue that bio compost is manufactured by treating Press mud with some chemicals and hence, both Bagasse and Press mud were marketable, as being covered under the definition of excisable goods under section 2(d) of the Excise Act, 1944. Revenue therefore assumed that the appellant had contravened the provisions of Rule (6) of CENVAT credit rules as they had not maintained separate accounts for receipt, consumption and inventory. This prompted the revenue to issue statements of demand dated 01.09.2017 and 06.07.2018, proposing to recover 6% of the value of exempted goods with applicable interest and penalty. After due process and after considering the explanation filed by the appellant in response to both the statements of demand, Order-in-Original was passed, where it was held that up to 2014 15 Bagasse and Press mud could be treated as waste and not excisable goods. In view of the Supreme Court ruling in the case of DSCL Sugar Limited and vide Order-in-Original No.12/2018-CE (ADC) dated 21.12.2018, ordered appropriation of the amounts paid by the appellant and also imposed equal penalty under rule 15 of CCR read with sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or common disposal. Based on the facts as contended, the following issues are to be decided by us: (i). Whether the investment in shares is an exempted service, requiring the reversal of credit? And (ii). Whether Press mud is waste product like Bagasse? . Further, since the issue involves the exigibility of goods/service tax, it is for the Revenue to prove their case conclusively. 6. We are tempted to consider the second issue to start with, since it was contended by the Ld. Advocate for the appellant that the same is covered by the decision of Hon ble Supreme Court in the case of DSCL Sugar Limited [2015 (322) E.L.T. 769 (S.C.)], wherein it has been held that waste product such as Bagasse is not an excisable goods. The said decision has thereafter been followed by the Hon ble Allahabad High court in the case of Balrampur Chini Mills Ltd. Vs. Union of India [2019 (368) ELT 276 (All.)]. 7. Once the Supreme Court decision is applied, it would only mean that the waste product is not a manufactured product to be considered as a final product for the purpose of Cenvat Credit Rules. Consequently, no credit is required to be reversed. Rule (6) of Cenvat Credit Rules as it stood then, coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 unaltered by insertion of Explanation 1. 32. In absence of Bagasse being a manufactured final product, the obligation of a reversal of Cenvat period under Rule 6(1) of the Cenvat Credit Rules, 2004 is not attracted. It has also been noticed that Bagasse has always been an exempted goods under Rule 2(d) of the Cenvat Credit Rules, 2004. It has been mentioned in Central Excise Tariff Heading 2303 20 000 and was subjected to NIL rate of duty. It therefore, fell within the definition of exempted goods as defined under Rule 2(d) and is not a non-excisable goods, as mentioned in the impugned circular. 33. That the Circular dated 25-4-2016 interpreting Explanation 1 to Rule 6 has provided that consequently, Bagasse, dross and skimmings of non-ferrous metal or any such by-product of waste, which are non-excisable goods and are cleared for consideration from the factory need to be treated like exempted goods for purpose of reversal of credit of input an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstand the logic in treating the mere investment as an exempted service because, the revenue has not specifically alleged if there is any service in the first place. Secondly, up to 01.07.2012, even if it is assumed to be an exempted service, then the same was not taxable. With the introduction of negative list w.e.f. 01.07.2012, S. 66B of the Finance Act empowers the levy of service tax on the value of all services other than those in the negative list, which are provided or agreed to be provided, by one person to another. Exempted service, although exempted , nevertheless should satisfy the ingredients of service in the first place. 14. It is clear from Rule 6(1) of the Cenvat Credit Rules, that reversal of CENVAT Credit is warranted only where the output is an exempted service . In this regard, it is important to note that for an activity to qualify as exempted service , it should first be a service . Prior to the negative list tax, was leviable not on any service but only on a taxable service , as referred by the Finance Act, 1994. With the introduction of the negative list service was defined under Section 65 B(44). Section 65B (44) of the Finance Act, is reproduced hereunder ..... X X X X Extracts X X X X X X X X Extracts X X X X
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