Facts –

• The Appellant, Purna Sahakari Sakhar Karkhana Ltd is manufacturer of sugar and molasses and during the process of manufacturing sugar & molasses by-products bagasse, press mud, boiler ash were generated which, as per the appellants, are nothing but waste/residue/refuse. It is admitted fact that the appellant sold the aforesaid by-products/waste in the market.
• Three show cause notices were issued demanding amount equal to 5% or 6% of sale value of Press mud & Boiler Ash for violation of the provisions of Rules 6(2) & 6(3) ibid along with interest and penalty.
• Being aggrieve the appellant had filed an appeal.

Issue –

• Whether in view of amendment to Rule 6(3) of Cenvat Credit Rules, 2004 vide notification dated 01.03.2015, the appellant is liable to pay @5% /6% of the sale value of waste or by-products which are exempted i.e. pressmud, bagasse and boiler ash, generated during the manufacturing of sugar/molasses as they failed to maintain separate accounts for dutiable and exempted goods as provided under Rule 6(2)?

Order –

• The Tribunal relied on the decision of the Hon’ble Supreme Court in the matter of DSCL Sugar Ltd. “Bagasse, pressmud and boiler ash” are not ‘goods’ but merely a waste or by-product therefore Rule 6 of the Cenvat Rules shall have no application in the such cases as they are bound to come into existence during the crushing of the sugarcane and are an unavoidable agricultural waste.
• Provisions of Rule 6(3) ibid are applicable only when a manufacturer is engaged in the manufacture of any final product which is chargeable to duty as well as any other final product which is exempted from whole of duty or chargeable Nil rate of duty using Cenvat inputs.
• It is also found that the appellant here is not manufacturing bagasse or pressmud or boiler ash. These are by-products only and merely emerge as waste or residue while manufacturing sugar and molasses from sugar cane. None of the by-products falls within the definition of manufacture and in its absence nothing can be demanded from the appellant.
• It is not the case anywhere that after the amendment on 1.3.2015 by-products/ waste/residue have been included in the definition of ‘manufacture’ and therefore held that the provisions of amended Rule 6(3) or Rule 6(2) ibid has no application and resultantly the demand raised by the revenue cannot sustain.
• Hence the appeal is allowed.