2023-VIL-316-KAR-CE
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CENTRAL EXCISE High Court Cases

Central Excise - Applicability of Rule 6 of the CENVAT Credit Rules, 2004 to bagasse used for generation of electricity – Revenue issued Show cause notice and consequent statement of demand basis amendment to Rule 6 w.e.f. 01.03.2015 and the Circular dated 25.04.2016 - Petitioner case that bagasse is an agricultural waste and cannot be considered as a manufactured product so as to attract the provisions of Rule 6 of CCR, 2004 – HELD – the question as to whether bagasse is an agricultural waste or a manufactured product so as to attract Rule 6 came up for consideration before the Apex Court in DSCL Sugar case - the Apex Court clearly held that bagasse was agricultural waste and was not a manufactured product and consequently, the provisions of Rule 6 were not applicable to bagasse; the Apex Court further held that Rule 6 was also not applicable to Electricity generated from bagasse - by virtue of the Circular dated 25.04.2016, the respondents sought to overcome the judgment of the Apex Court in DSCL Sugar’s case and invoke the 2015 amendment to Rule 6 for the purpose of making the said Rule 6 applicable to bagasse – Revenue has took cognizance of the matter including the judgments of the Apex Court and issued Circular No.1084/05/22 dated 07.07.2022, whereunder the earlier Circular dated 24.05.2016 was rescinded and withdrawn – this clearly establish that bagasse is not a manufactured product and Rule 6 of the Cenvat Credit Rules, even after 2015 amendment is not applicable to bagasse nor to electricity generated from bagasse coupled with the fact that the Circular dated 25.04.2016 issued by the respondents pursuant to the 2015 amendment to Rule 6 having not only been quashed, but the same having been rescinded by issuance of the Circular dated 07.07.2022 and consequently, the respondents did not have jurisdiction or authority of law to issue the impugned show cause notice and Statement of Demand, hence, they both are set aside – writ petition is allowed
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