Commissioner Of Central Excise & CGST, Meerut-I vs M/S Bajaj Hindustan Sugar Ltd

P.K. Choudhary, Member (J)

The respondent is engaged in the manufacture of sugar and molasses during the course of which bagasse and press mud emerges. Show cause notice dated 27.04.2018 was issued alleging non-payment under Rule 6(3)(i) of the CENVAT Credit Rules, 2004 on the clearance of exempted goods. For the period from April 2016 to June 2017 the Adjudicating Authority confirmed the demand as proposed in the show cause notice along with interest and also imposed penalty of equal amount under Rule 6 of CENVAT Credit Rules, 2004 read with Section 11AC of the Central Excise Act, 1944. Being aggrieved the assessee filed the appeal before the first Appellate Authority and vide the impugned Order-In-Appeal learned Commissioner has filed the present appeal before the Tribunal.

Learned Departmental Representative appearing on behalf of the Revenue reiterates the grounds of appeal and submits that since separate accounts and inventories have not been maintained as required in terms of the provisions of Sub-Rule 3 of Rule 6 of CENVAT Credit Rules, 2004 the demand has rightly been confirmed. He further submits that the appeal filed by the Department be allowed.

Learned Advocate appearing on behalf of the respondent submits that the issue as to whether the amount is required to be reversed or not in respect of bagasse and press mud has already been decided by the Hon’ble Supreme Court in the case of Union of India V/s DSCL 2015 (323) ELT 769 (S.C.) and Revenue’s appeal was dismissed.

Heard both the sides and perused the appeal records.

The issue involved in the present appeal is as to whether the respondent was required to reverse the credit under Rule 6 of the CENVAT Credit Rules in respect of bagasse and press-mud being cleared by them. I find that the issue is no more res-integra. Revenue’s only grievance is that the precedent decision followed by the learned Commissioner (Appeals) would not apply to the present case of the respondent as Rule 6 of the CENVAT Credit Rules was amended subsequent to the judgement of the Hon’ble Supreme Court. It is the case of the Revenue that consequent to such amendment in Rule 6 of the CENVAT Credit Rules non-excisable goods cleared for a consideration from a factory are to be treated as exempted goods for the purpose of Rule 6 of the CENVAT Credit Rules for clearances w.e.f. 01.03.2015. They have also referred to Board Circular No.1027/15/2016-CX dated 25.04.2016 which states that:-

"4.2 Consequently, Bagasse, Dross and Skimmings of non-ferrous metals or any such by product or waste, which are non-excisable goods and are cleared for a consideration from the factory need to be treated like exempted goods for the purpose of reversal of credit of input and input services, in terms of Rule 6 of the Cenvat Credit Rules, 2004".

I find that the grounds of the Revenue was dealt with by the Tribunal in the case of Commissioner of Central Excise & Excise Appeal No.70405 of 2021 Service Tax, Meerut-I V/s M/s Bajaj Hindusthan Sugar Ltd. wherein it was observed as under:-

“3. I have heard the learned Departmental Representative on behalf of the Revenue. The respondents were manufacturers of sugar and molasses. They were removing Bagasse and Press Mud. The period covered is from 1st March 2015 to 31st March 2016. In view of the amendment in explanation under sub-rule (1) of Rule 6 of Cenvat Credit Rules, 2004 w.e.f. 01.03.2015 there was an obligation on the part of the manufacturer to pay amount under sub-rule 3 of said Rule 6 at a fixed percentage of the value of non-excisable goods removed when Cenvat Credit on input and input services were availed and such inputs and input services were used in the manufacture of excisable as well as exempted goods including non-excisable goods. Therefore proceedings were initiated against the respondent for recovery of around Rs.44.00 Lakhs. On perusal of record I note that the issue is covered by precedent decision in respondent’s own case in respect of their another unit through Final Order No.70801/2019 dated 18.04.2019. It was held in the said Final Order that Press Mud and Bagasse are not arising out of manufacturing activity and the same are agricultural waste and residue and therefore since the said Final Order is applicable in the present case I uphold the impugned order and reject the appeal filed by Revenue.”

I also find that in the case of Commissioner of Central Excise and Service Tax, Meerut-I v/s M/s Bajaj Hindusthan Sugar Ltd. vide Final Order No.72832/2018 dated 10 December, 2018, the Revenue’s appeal was rejected by the Tribunal by observing as under:-

“6. The short issue required to be decided is as to whether the explanations entered in Rule 6(3) w.e.f. 01st March, 2015 would have the effect of the assessee being under a legal obligation to pay duty on the non-excisable goods bagasse and press mud. We note that the explanations were considered by the Tribunal in the case of M/s.Simbhaoli Sugar Ltd. v. Commissioner of Central Excise, Noida vide final Order No.71567/2018 dated 19.07.218.

It was observed that inasmuch as according to Supreme Court’s decision in the case of Union of India v. DSCL Sugar Ltd. referred (supra), bagasse has been held to be an agricultural waste or residue, there could be no manufacturing activity. The press mud has also been held to be a waste and not a manufactured product. As such the amendment made in the provisions of Rule 6 would not have any effect to the facts and circumstances of the present case.

In view of the above discussion I do not find any justifiable reasons to interfere in the impugned order passed by the learned Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected.