Custom, Excise & Service Tax Tribunal
M/S H.P.C.L.Biofuels Ltd vs Commr. Of Central Excise, Patna on 18 January, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
EAST REGIONAL BENCH : KOLKATA
Ex.Appeal No.76946/17
Arising out of O/A No.21/Pat/C.Ex./Appeal/2017-18 dated 25.08.2017 passed by Commr. (Appeals) of Central Excise, Patna
M/s H.P.C.L.Biofuels Ltd.
APPELLANT(S)
VERSUS
Commr. of Central Excise, Patna
RESPONDENT (S)
APPEARANCE Shri Dipankar Majumder, Adv. for the Appellant (s) Shri S. S. Chattopadhyay, Supdt. (A.R.) for the Revenue CORAM:
SHRI S. K. MOHANTY, HONBLE JUDICIAL MEMBER DATE OF HEARING/DATE OF DECISION : 18. 01. 2018 ORDER NO.FO/A/75099/2018 Per Shri S. K. Mohanty :
This Appeal is directed against the impugned Order-in-Appeal No.21/Pat/C.Ex./Appeal/2017-18 dated 25.08.2017 passed by Commr. (Appeals) of Central Excise, Patna.
2. Brief facts are that the appellant is engaged in the manufacture of sugar and molasses, falling under Chapter Heading 17 of the Central Excise Tariff Act, 1985. During the process of manufacture of the said final product, Bio-compost in the form of waste is generated, which the appellant sold under the brand name of Jaivik Khad. Since the appellant did not follow the procedure prescribed under Rule 6 of the Cenvat Credit Rules, 2004 for maintenance of separate records and for payment of amount in respect of such waste product removed from the factory, the Department initiated show-cause proceedings against the appellant for confirmation of the amount in terms of Rule 6 read with Section 11A of the Central Excise Act, 1944. The matter was adjudicated against the appellant, wherein the duty demand of Rs.2,31,513/- was confirmed along with interest and equal amount of penalty was imposed. In appeal, the ld.Commissioner (Appeals) has upheld the adjudged demand. Hence, the present appeal is before the Tribunal.
3. The ld.Counsel appearing for the appellant submits that the issue arising out of present dispute is no more res-integra in view of the decision of the Tribunal in the case of Commr. of Central Excise & S.Tax, Patna Vs. Riga Sugar Company Ltd., reported in 2016 SCC OnLine CESTAT 1482, wherein this Tribunal by considering Bio-Compost as waste product, has held that the provisions of Rule 6 of the Rules, shall not be applicable for consideration of such product as exempted excisable goods. Thus, he submits that the adjudged demand confirmed against the appellant cannot be sustained in view of the settled position of law.
4. On the other hand, the ld.D.R. appearing on behalf of the Revenue, reiterates the findings recorded in the impugned order and further submits that the appellant is liable to pay the amount under Rule 6 w.e.f.01.03.2015 in view of the Explanation I appended to the said Rule.
5. Heard both sides and perused the case records.
6. I find that the issue arising out of the present dispute, whether Bio-compost (Jaivik Khad) is to be considered as exempted product, the Tribunal has held in the case of Riga Sugar Company Ltd. (supra) that waste product will not fall under the purview of exempted product and accordingly, the provisions of Rule 6 (3) of the Rules, will not be applicable. The relevant Paragraph of the said decision is extracted herein below :
Heard both sides and perused the case records. The issue involved in the present proceedings is whether Respondent is required to discharge an amount equivalent to 5%/8% of the value of Bagasee, Press mud & Bio-compost sold by the Respondent. It is observed from paragraph-11 of the Apex Courts decision in the case of Union of India Vs. DSCL Sugar Ltd. that provisions of Rule 6 of CCR shall have no application as Bagassee is not a product of manufacture. Provisions of Rule 6 (3) of the CCR are applicable only to a situation where exempted as well as dutiable products are manufactured by an assessee out of common inputs and no separate records are maintained. It has been held by the Apex Court that no manufacturing activity is undertaken with respect to a product like Bagasee, which is only an agricultural based residue and is not a result of any process of manufacture. The same is true to the products Press mud and Bio-compost. Accordingly, Respsondent is not liable to pay 5%/8% of the sale proceeds of these products in the light of law laid down by the Apex Court.
7. In view of the above decision of the Tribunal, I am of the considered opinion that the appellant was not liable to pay the amount as contemplated under Rule 6 (3) of the Cenvat Credit Rules, 2004. However, I find that Rule 6 of the Rules, was amended w.e.f. 01.03.2015, wherein Explanation I was appended, providing that :
Exempted goods or final products as defined in clauses (d) and (h) of Rule 2 shall include non-excisable goods cleared for a consideration from the factory. The effect of amendment of Rule 6 ibid is that the benefit of claim of non-application of Rule 6, shall not available to the waste/by-product, if the same are cleared from the factory on receipt of consideration. In this case, since the appellant had removed Bio-compost (Jaivik Khad) upon receipt of consideration from the buyers, it is squarely covered under the Explanation appended to Rule 6 w.e.f. 01.03.2015. Therefore, the appellant is liable to pay amount as contemplated under Rule 6 (3) ibid. Accordingly, the original authority is directed to quantify the amount, which the appellant is liable to pay for the period from 01.03.2015. However, it is made clear that the appellant is not liable to penalty confirmed in the impugned order, in view of insertion of Explanation Clause subsequently in the Statute Book.
8. In line with the above observations, after setting aside the impugned order, I remand the matter to the original authority for quantification of demand against the appellant.
9. Appeal is disposed of in the above manner.
(Dictated and pronounced in the open Court) Sd/ (S. K. MOHANTY) MEMBER (JUDICIAL) mm 9 Ex.Appeal No.76946/17