M/S Shree Ukai Pradesh Sahakari vs Commissioner, Central Excise & Service ...

Customs Excise and Service Tax Appellate Tribunal16 July 2015

CitationAppeal No.E/10789/2013-SM

Ratio decidendi

The rule this decision rests on

Where bagasse and press mud, being residual products arising in the manufacture of sugar, are not themselves manufactured goods because no manufacturing process is involved in generating them, their generation cannot amount to the manufacture of exempted goods for the purposes of Rule 6 of the CENVAT Credit Rules, 2004, and no reversal of credit under Rule 6(3) arises on that account. A departmental circular that treats such residual products as dutiable goods, and that seeks to govern the disposal of appeals on that footing, cannot be relied upon to sustain an order of the First Appellate Authority where the High Court has set aside that circular and held that no manufacturing activity is involved; the appellate order resting on that circular is therefore not sustainable and falls to be set aside.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

In The Customs, Excise & Service Tax Appellate TribunalWest Zonal Bench At Ahmedabad

Appeal No.E/10789/2013-SM [Arising out of OIA No.CCEA-SRT-I/SSP-370/2012-13/U/S 35A(3)(Final Order), dt.25.02.2013, passed by Commissioner (Appeals), Central Excise & Customs, Surat]

M/s Shree Ukai Pradesh Sahakari Khand Udyog Mandli Ltd Appellant

Commissioner, Central Excise & Service Tax, Surat-I Respondent

Represented by:

For Appellant: None For Respondent: Shri L. Patra, Authorised Representative

For approval and signature:

Honble Mr. H.K. Thakur, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)

Date of Hearing/Decision:16.07.2015

Order No. A/11014 / 2015, dt.16.07.2015

Per: H.K. Thakur

This appeal has been filed by the Appellant against OIA No. CCEA-SRT-I/SSP-370/2012-13/U/S 35A(3)(Final Order), dt.25.02.13. The issue involved is whether the bi-products Baggase and Press Mud arising during the process of manufacture of excisable goods i.e. Sugar should be considered as exempted goods for the purpose of reversing of an amount equivalent to 5% or 10% under the provisions of Rule 6(3) OF CENVAT Credit Rules, 2004. None appeared on behalf of the Appellant during the course of hearing. It is also observed from the case records that none appeared for Appellant on earlier occasion when the stay application filed by the Appellant was heard.

2. Shri L. Tendupatra (AR) appearing on behalf of the Revenue argued that as per Circular No.904/24/09-CX, dt.28.10.2009 issued by CBEC and subsequent Circular No.941/02/2011-CX dt.14.02.2011, the cases pending for the period prior to Budgetary changes of 2008 will not be affected by the dismissal of appeal by the Honble Supreme Court on 21.07.2010 in the case of M/s Balrampur Chinni Mills. Learned Authorised Representative, therefore, strongly defended the order passed by the First Appellate Authority.

3. Heard both sides and perused the case records. It is observed that in the case of Balrampur Chinni Mills Vs UoI [2014 (300) ELT 372 (All.), Honble Allahabad High Court, after considering the Apex Court decision dt.21.07.2010 held that there was no manufacturing involved when the sugar is crushed leading to generation of Bagasse. Honble Allahabad High Court in Paras 18 & 29, held as follows:-

18.?A perusal of Rule 6(1) clearly shows that the manufacturer has to manufacture both dutiable goods as well as exempted goods. Since bagasse is not manufactured goods but is a waste product which emerges/comes into existence in the process of manufacture of sugar, it is not manufacture of exempted goods.

29.?Thus, it is not in dispute that the bagasse is an agricultural waste of sugarcane, though marketable product, but the duty cannot be imposed as it does not involve any manufacturing activity simply by adding an explanation under Section 2(d) of the Central Excise Act, 1944, whereby the definition of goods has been defined will not make bagasse, which, as stated hereinabove, is an agricultural waste to be a dutiable item and the Chief Commissioner vide Circular dated 3-10-2009 nullified the judgment and order dated 21-7-2010 rendered in Civil Appeal No. 2791 of 2005.

4. Similarly, in the case of Hindalco Industries Vs UoI [2015 (315) ELT 10 (Guj.)] also Bombay High Court set aside the CBEC Circular No.904/24/2009-CX, dt.28.10.2009 and Circular No.941/02/2011-CX dt.14.02.2011.

5. In view of the above settled position of law, the reliance placed by First Appellate Authority on CBEC Circular, dt.14.02.2011 is not sustainable and is required to be set aside. Appeal filed by the Appellant is allowed by setting aside the OIA dt.25.2.2013 issued by the First Appellate Authority.

(Dictated and pronounced in Court)

(H.K. Thakur) Member (Technical)

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