The appellant is engaged in the manufacture of sugar (main product) and molasses (by-product), in which process press-mud emerges as a waste, which is sold for a price. Press-mud does not figure in the First Schedule to the Central Excise Tariff Act. Nevertheless, the Department issued a show-cause notice to the appellant demanding 10%/5% of the value of press-mud under Rule 6(3) of the CENVAT Credit Rules, 2004 (CCR) on the premise that press-mud was an 'exempted product' of the appellant and, therefore, the appellant was liable to pay such amount under Rule 6(3) ibid on account of having used common inputs in the manufacture of their dutiable products (sugar and molasses) and press-mud (supposed to be exempted) during the period of dispute (10-5-2008 to 30-11-2009). This demand came to be confirmed by the original authority and sustained by the Commissioner (Appeals). Hence the present appeal and stay application.

2. After hearing both sides, I find that the above demand is based on the explanation to the definition of "excisable goods" given under Section 2(d) of the Central Excise Act, 1944. This explanation says that "goods" includes any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable. The learned Superintendent (AR) submits that the appellant admittedly sold press-mud for a consideration and hence the material should be deemed to be marketable. Per contra, it is submitted by the learned counsel for the appellant that marketability is not the only criterion for excisability and that the test of manufacture also should be answered. It is submitted that press-mud was not intentionally manufactured by the appellant and the same was generated in the course of manufacture of excisable goods viz. sugar and molasses. In this connection, the learned counsel refers to the definition of "manufacture" given under Section 2(f) of the Act. On a perusal of this definition, I have found a valid point in the submissions made by the learned counsel. "Manufacture" as defined under the Act pertains to any process leading to a "manufactured product". It is undeniable that press-mud which was generated in the appellant's factory during the material period was not a "manufactured product". In other words, the fundamental test of manufacture fails and, therefore, the arguments based on the aforesaid explanation to the definition of excisable goods are inconsequential. In the result, press-mud cannot be considered to be an 'exempted excisable goods.' It is also pertinent to note that this commodity does not figure anywhere in the 1st Schedule to the Central Excise Tariff Act. For these reasons, Rule 6(3) is not attracted and consequentially the impugned demand is unsustainable. Therefore, waiver of pre-deposit and stay of recovery are granted as prayed for.