Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Godavari Bio-Refineries on 19 May, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/21165/2015-SM [Arising out of Order-in-Appeal No. BGM-EXCUS-000-DIVD-JC-APP-HAB-022-2015 dated 18/02/2015 passed by Commissioner of Central Excise, MYSORE (APPEALS) ] Commissioner of Central Excise, Customs and Service Tax Belgaum NO. 71, CLUB ROAD, CENTRAL EXCISE BUILDING, BELGAUM - 590001 KARNATAKA Appellant(s) Versus M/s. Godavari Bio-refineries Sameerwadi, Tq Modhol, BAGALKOT - 0000 KARNATAKA Respondent(s)
Appearance:
Mr. K.T. Pakshirajan, AR For the appellant Mr. V. B. Gaikwad, Advocate For the respondent Date of Hearing: 19/05/2017 Date of Decision: 19/05/2017 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order No. 20702 / 2017 Per : S.S GARG The present appeal is filed by the Revenue against the impugned order dated 18.2.2015 passed by the Commissioner (A) wherein the Commissioner (A) has allowed the appeal of the assessee.
2. Briefly the facts of the case are that assessee is engaged in the manufacture of sugar, molasses, rectified spirit and denatured spirit, falling under Chapter Nos.17 and 22 of the Schedule to the Central Excise Tariff At, 1985. For manufacture of sugar and molasses, the main raw material is sugar cane. They are extracting the sugarcane juice (by crushing the said sugarcane) which is further processed and used for manufacture of sugar and molasses. The impurities (in the form of sludge) which are taken out of the sugarcane juice during the course of filtration/purification are referred to as press-mud. The spent wash is the impurities in liquid form taken out of the molasses while processing the same. The boiler ash is the ash remaining after burning of the bagasse in the boiler. They are dumping the above said items viz., press-mud, spent wash and boiler ash in the compost pit, where the same get composted and the said composted mass of press-mud and spent wash and boiler ash is commonly referred as compost and is sold/supplied as it is capable of use as fertilizer in farms. They avail CENVAT credit paid on the input (chemicals) and input services (security Agencys service, Telecommunication Service, etc.) as per the provisions of the CENVAT Credit Rules (CCR), 2004 used in the manufacture of the final product. It appeared to the department that they had started paying the central excise duty @ 5% / 6% in terms of the Notification No.2/2011-CE dated 1.3.2011 with availment of CENVAT credit with effect from 1.4.2011 onwards which showed that they were availing of the CENVAT credit on the inputs and input services used in the manufacture of compost prior to 1.3.2011. It appeared to the Department that they have not complied with the provisions of Rule 6 of the CCR and had not paid the duty due in this regard (non-maintenance of separate account as required under Rule 6(2) of the CCR for the quantity of common inputs/input services used in the manufacture of the said compost and the dutiable sugar /molasses). It appeared that they had suppressed the facts of manufacture and clearance of compost by using credit availed input services as the said clearances were not declared by them in their ER-1 returns/correspondence and but for the departmental officers detection, the issue would have gone unnoticed. On these allegations, a show-cause notice was issued to the assessee demanding an amount equal to 5% or 10% of the sale value of the compost manure cleared by them without payment of duty during the period from September 2008 to February 2011. After following due process of law, the lower authority has confirmed the demand and ordered the recovery of the said amount along with interest and penalty. Aggrieved by the said order, the assessee filed an appeal before the Commissioner on the ground that the order passed by the lower authority is contrary to the series of decisions given by the High Court/Tribunal wherein the courts have repeatedly laid down that the compost is not manufactured product and hence even after 10.5.2008 it will remain as non-excisable goods. The compost cannot be treated as a final product for the purpose of CENVAT Credit Rules and that the inputs/input services which are used for the manufacture of sugar or molasses cannot be held as used for manufacture of compost and the provisions of Rule 6 are not applicable to the compost. The Commissioner (A) vide the impugned order has accepted the appeal of the assessee on merit as well as on limitation and set aside the Order-in-Original. Aggrieved by the same, the Revenue has filed the present appeal.
3. Heard both the parties and perused the records.
4. The learned AR submitted that the impugned order is not sustainable in law and the assessee is liable to pay an amount equal to 5% or 10% of the sale value of the compost manure as per Rule 6 of the CENVAT Credit Rules and assessee has failed to do the same. He supported the Order-in-Original confirming the demand.
5. On the other hand, the learned counsel for the respondent submitted that the issue involved in the present case is no more res integra and has been settled in favour of the assessee by series of judgments passed by various Benches of the Tribunal and also the High Court. He further submitted that the compost is not a manufactured product and is non-excisable product and therefore, the provisions of Rule 6 of CCR are not applicable to the compost. In support of his submission, he relied upon the following decisions:
i. CCE vs. Spade Elektro (P) Ltd.: 2004 (175) ELT 319 (Tri.) ii. CCE vs. Kumbhi Kasari S.S.K. Ltd.: 2011 (266) ELT 87 (Tri.) iii. CCE vs. Echjay Forging Pvt. Ltd.: 2015 (319) ELT 127 (Tri.) iv. CCE vs. Balkrishna Industries: 2006 (201) ELT 325 (SC) v. UOI vs. Hindustan Zinc Ltd.: 2014 (303) ELT 321 (SC) vi. Rallies India Ltd. vs. UOI: 2009 (233) ELT 301 (Bom.) vii. CCE vs. Sterling Gelatin: 2011 (270) ELT 200 (Guj.) viii. CCE vs. EID Parry (I) Ltd. : 2013 (293) ELT 10 (Mad.) ix. Sandoz Pvt. Ltd. vs. CCE: 2016 (343) ELT 1170 (Tri.) x. Sharad S.S.K. Ltd. vs. CCE: 2015 (321) ELT 468 (Tri.) xi. Final Order No.A/106/13/EB/C-II dt.14.1.2013 : M/s. Sonhira S.S.K. Ltd.
xii. Final Order No.A/1035-1036/12/EB/C-II dt.31.8.2012: M/s. Rajarambapu Patil S.S.K. Ltd. xiii. Final Order No.A/1034/12/EB/C-II dt.3.9.2012 : M/s. Sahyadri S.S.K. Ltd.
xiv. Final Order No.A/912/12/EB/C-II dt.31.8.2012: M/s. Shri Gurudatta Sugars Ltd.
xv. Manakpur Chinni Mills vs. CCE: 2012 (284) ELT 638 (Tri.) xvi. Balrampur Chini Mills Ltd. vs. UOI: 2014 (300) ELT 372 (All.) He further submitted that the present appeal filed by the Revenue is not maintainable as it is not challenging the impugned order on limitation. He further submitted that the Commissioner (A) has held that the demand for 5% / 10% amount under Rule 6 of the CCR, 2004 on the compost manure cleared during the period from 2008-2011 is not sustainable on merit as well as on point of limitation. The Department in the present appeal filed against the Order-in-Appeal has challenged only the findings of the Commissioner (A) holding the demand as not sustainable on merits and the Department has not challenged the findings recorded by the Commissioner (A) for holding the demand as barred by limitation. In support of this submission, he relied upon the decision in the case of CCE vs. Spade Elektro (P) Ltd.: 2004 (175) ELT 319 (Tri.); CCE vs. Kumbhi Kasari S.S.K. Ltd.: 2011 (266) ELT 87 (Tri.); CCE vs. Echjay Forging Pvt. Ltd.: 2015 (319) ELT 127 (Tri.) and CCE vs. Balkrishna Industries: 2006 (201) ELT 325 (SC), wherein it has been repeatedly laid down that if the Commissioner (A) has dropped the demand on merit as well as on point of limitation and if the department has filed appeal before the Tribunal only challenging the findings of the Commissioner (A) dropping the demand on merit and in the appeal, no challenge is made to the findings of the Commissioner (A) dropping the demand on limitation, then the appeal filed by the department will not survive and on this ground also the Departments appeal is bad in law.
6. After considering the submissions of both the parties and perusal of the material on record and the various case laws relied upon by the counsel for the respondent, I am of the considered view that the issue is squarely covered in favour of the assessee by various decisions cited supra and by following the ratios of the said decision, I find that there is no infirmity in the impugned order passed by the Commissioner (A) and therefore I do not see any reasons to interfere in the impugned order and the same is upheld by dismissing the appeal of the Department.
(Operative portion of the Order was pronounced in Open Court on 19/05/2017.) S.S GARG JUDICIAL MEMBER rv 7