The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad bench has held that the Bagasse/ Press mud produced during the course of manufacture of sugar cannot be treated as exempted products and therefore, the provision of Rule 6 of Central Excise Rule, 2004 cannot be applicable.
The appellants, Khedut Sahakari Khand Udyog Mandli Ltd, are engaged in the manufacture of sugar from sugarcane; during the manufacture press mud is generated as byproduct; it is mixed with spent wash and sold as composed. The Department was of the view that press mud/compose which emerges as a byproduct is an exempted product. It was observed that since the appellants did not maintain separate records as required under Rule 6 of CENVAT Credit Rules and therefore, the appellant is required to pay 6% of the value of the compost.
Ms. Shamita Patel & Shri Rahul Gajera, Advocate for the Appellant contended that it is a settled law that the byproducts/waste like press mud that emerge during the process of manufacture of sugar are not manufactured final products and as such are not covered under Rule 6 of CENVAT Credit Rules, 2004 and consequently, 6% of the value of the products is not payable under Rule 6(3) of CENVAT Credit Rules, 2004.
The Tribunal bench comprising Mr. P. Anjani Kumar, Member (Technical) observed that “on going through records of the case and the ratio of the cases cited by the appellants, the issue is no longer res-integra. I find that, Apex Court in the case of Balarampur Chini Ltd. and DSCL Sugar Ltd. has enunciated the principal that Bagasse/ Press mud produced during the course of manufacture of sugar cannot be treated as exempted products and the provision of Rule 6 of Central Excise Rule, 2004 cannot be applied.”
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