Pressmud, bagasse, boiler ash and sludge being waste or byproduct is outside the purview of rule 6 of CCR, 2004

Bhaurao Chavan SSK Ltd Vs Commissioner of CGST & Central Excise (CESTAT Mumbai)

CESTAT Mumbai held that pressmud, bagasse, boiler ash and sludge, generated during the manufacturing of sugar/molasses, are waste or byproduct and therefore Rule 6 of the Cenvat Credit Rules, 2004 (CCR, 2004) shall have no application.

Facts- The instant appeal is filed assailing the impugned order passed by the Commissioner (Appeals), CGST & Central Excise, Nashik rejecting the appeal filed by the appellant and upholding the recovery of the amount equal to 6% of sale value of Bagasse, Press mud, boiler ash and Sludge under Rule 6(3) of the Cenvat Credit Rules, 2004 alongwith interest and penalty.

The issue involved herein is whether the appellant is liable to pay an amount equal to 6% of the sale value of exempted goods/products i.e. Bagasse, press mud, boiler ash and sludge generated during the manufacturing of sugar/molasses in terms of Rule 6(3) of Cenvat Credit Rules, 2004?

Conclusion- An identical issue had arisen in the matter of Purna Sahakari Sakhar Karkhana Ltd. vs. Commr. CGST& CE, Aurangabad in which this Tribunal allowed the appeal filed by the assessee therein. It was held that there is no manufacturing process involved in pressmud’s production. “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.

Please become a Premium member. If you are already a Premium member, login here to access the full content.