The Central Board of Excise and Customs (CBEC) has withdrawn a circular on levy of excise duty on bagasse, dross and other similar by-products following a court ruling that such wastes are not manufactured products.
Excisability of bagasse and similar other by-products or wastes arising during the course of manufacture of an excisable product has been an issue under dispute. Following circulars/instruction have been issued from time to time on the subject:-
(a) Circular No. 904/24/2009-CX dated 28.10.2009,
(b) Circular No. 941/02/2011-CX dated 14.02.2011,
(c) Instruction F.No.17/02/2009-CX (Pt.) dated 12.11.2014
The issue came before the Hon’ble Supreme Court in a case of M/s Union of India and Ors vs M/s DSCL Sugar Ltd [2015-TIOL-240-SC-CX] dated 15.07.2015. Hon’ble Supreme Court examined the issue and reaffirmed that bagasse is not a manufactured product. The Judgement applies to both periods, before and after the insertion of explanation in Section 2(d) of the Central Excise Act, 1944 by the Finance Act, 2008. It may also be noted that Hon’ble High Court of Bombay in case of M/s Hindalco Industries Ltd. vs. Union of India [2015(315)E.L.T.10 (Bom.)] came to a similar conclusion in relation to dross and skimming of aluminum, zinc or other non-ferrous metal.
“The Judgement applies to both periods, before and after the insertion of explanation in Section 2(d) of the Central Excise Act, 1944 by the Finance Act, 2008,” it said.
“In the light of the judgments, circulars of the Board on the subject… have become non-est and are hereby rescinded,” CBEC noted in the circular.
Cases kept in Call Book may be taken out and adjudicated, it told all Principal Chief Commissioners of Central Excise and Service Tax.
The Call bookcases are those cases, which can not be adjudicated immediately due to certain specified reasons and adjudication is to be kept in abeyance by transferring such cases to call books.
“Consequently, bagasse, dross, and skimmings of non-ferrous metals or any such byproduct 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,” CBEC further said in the circular.
Read the Circular below.
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