2006 (5) TMI 216 - AT - Central Excise

Summary

Issues:
1. Reversal of Cenvat credit on molasses used in the manufacture of rectified spirit.
2. Validity of Circular No. 615/6/2002-C.X. issued by CBEC.
3. Refund claim for reversed Cenvat credit.
4. Appeal against Commissioner (Appeal) order by the revenue.

Analysis:
1. The respondent, engaged in manufacturing sugar molasses, rectified spirit, and Fusel Oil, cleared rectified spirit at NIL duty rate and reversed 8% of its value as per Central Board of Excise and Customs Circular. A show cause notice demanded reversal of entire Cenvat credit on molasses used in manufacturing exempted ethyl alcohol. The Dy. Commissioner dropped the notice, but the appellant filed a refund claim for the reversed amount, which was initially rejected but later allowed by the Commissioner (Appeal) as part of the demanded sum.

2. The revenue appealed the Commissioner (Appeal) order, arguing that the reversed amount was not part of the earlier show cause notice for a larger sum. They contended that the duty was payable as per the CBEC circular, challenging the applicability of a Cegat decision cited by the Commissioner (Appeal) regarding the circular's enforceability.

3. The Tribunal noted that the duty demand based on the CBEC circular was settled by the Asstt. Commissioner's unchallenged order, entitling the appellant to a refund of the reversed amount. As the Asstt. Commissioner had determined no duty was leviable, the appellant's refund claim was justified, even though it was not part of the original show cause notice.

4. The Tribunal upheld the Commissioner (Appeal) order, finding no flaw in it, and dismissed the revenue's appeal. The decision was based on the Asstt. Commissioner's ruling on duty liability and the appellant's entitlement to a refund following that determination.

This detailed analysis covers the issues of Cenvat credit reversal, validity of the CBEC circular, refund claim, and the appeal against the Commissioner (Appeal) order, providing a comprehensive understanding of the legal judgment.