CENVAT Credit - Bagasse and Press Mud - Exempted Excisable Goods?
DURING the seminar at Visakhapatnam, an assesse from Sugar industry raised a query whether department was correct in raising demand on them at @5% under Rule 6(3) of CENVAT Credit Rules on the value of bagasse and press mud sold by them treating them as exempted goods. According to them both bagasse and press mud being waste products of sugar industry cannot be treated as final products for the purpose of Rule 6 of CCR, even if mentioned in Tariff, as held by various courts/Tribunals.
Perhaps, similar view is held by many sugar units and other manufacturers who sell waste products for a consideration. According to the Department, this position taken by the Sugar Industry may be correct for the period prior to 10.05.2008, but after 10.05.2008, the date from when the definition of "excisable goods" in clause (d) of Section 2 of the Central Excise Act, 1944 was amended, the bagasse/press mud and any other waste products generated and sold for consideration attracts provisions of Rule 6. The manufacturers have to either pay the amount at percentage on the value of goods sold or have to reverse proportionate credit under Rule 6(3A) CCR. This was clarified by the CBEC vide Circular 904/24/2009-CX. Dated: October 28, 2009 and F. No. dt 08.04.2010 addressed to the Dy. Director General, Indian Sugar Mills Association, New Delhi.
The amendment made in Section 2(d) of Central Excise Act decides only marketability of an article or substance and whether such article/ substance is a manufactured product or not is still a riddle, despite of the amendment to the definition of excisable goods in the Section 2(d) of the Act. Therefore, whether bagasse/press mud arising as waste products, are manufactured goods or not, is still a matter of litigation. However, as the Department has already taken a stand on the issue, the Sugar Industry may take note of the above circulars and comply with the provisions of Rule 6 by paying proportionate credit to avoid unnecessary litigation.
Though, the CBEC wants every circular to reach the trade, it is unfortunate that the Industry is still in doubt and not aware of an issue which was clarified by CBEC way back in 2009 and 2010. WHY CAN”T THE BOARD KEEP ITS CLARIFICATIONS IN PUBLIC DOMAIN?
CBEC F. No.17/2/2009-CX., Dated: April 08, 2010