Bagasse Press mud produced during the course of manufacture of sugar cannot be treated as exempted products
Shree Khedut Sahakari Khand Udyog Mandli Ltd., the appellants 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 contended that press mud/compose which emerges as a byproduct is an exempted product; the appellants did not maintain separate records as required under Rule 6 of CENVAT Credit Rules; therefore, the appellant is required to pay 6% of the value of the compost.
Learned Advocate appearing for the appellants submits 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; consequently 6% of the value of the products is not payable under Rule 6(3) of CENVAT Credit Rules, 2004.
Learned Advocate further submits that it has been held in the case of Balarampur Chini Mills (supra) that despite the amendment to Rule 6, the facts remains that the byproducts which emerge in the course of manufacture of products are not manufactured products and thus, do not fall under the scope of Rule 6; the explanations under Rule 6(1) will not change the settled principal of the law laid down by the Hon’ble Supreme Court in case of DSCL Sugar Ltd. -2015 (322) ELT 769 (SC).
The issue before me for decision is as to whether the appellants are required to reverse 6% of the value of the Bagasse/Press mud generated during the course of manufacture of sugar, for reason that the appellants have used common inputs and input services, under Rule 6 of Cenvat Credit Rule, 2004. Ongoing through records of the case and the ratio of the cases cited by the appellants. I find that the issue is no longer res-Integra. I find that the Apex Court in the case of Balarampur Chini Ltd. (supra) and DSCL Sugar Ltd. (supra) has enunciated the principle 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.