2009 (4) TMI 686 - AT - Central Excise

Summary

Issues involved: Appeal against the order allowing credit of Rs. 7,69,902.29, objection to the use of accumulated credit for payment of duty towards sugar, whether molasses is an input for sugar manufacture.

The Revenue filed an Appeal against the order allowing credit of Rs. 7,69,902.29. The case involved the merger of two units, M/s. New Swadeshi Sugar Mills and M/s. New Swadeshi Distillery, for which credit was allowed by the Commissioner of Central Excise. However, the Board reviewed the order, objecting to the use of accumulated credit for payment of duty towards sugar, specifically molasses. The main objection raised by the Revenue was that molasses is not considered an input for the manufacture of sugar.

The Respondents argued that since the Revenue did not object to the merger of the two units, the accumulated credit, including duty paid on inputs for dutiable goods, should not be denied. They highlighted the lack of a one-to-one relation between inputs and final products, citing a Board's Circular and Rule 3 of Cenvat Credit Rules to support their position. The Respondents were manufacturing sugar, denatured Ethyl Spirit, and Rectified Spirit post-merger, utilizing common inputs for both dutiable and exempted goods, with the exempted goods cleared on payment of 8% duty.

The Tribunal found that there was no strict correlation required between inputs and final products, allowing the credit earned on common inputs to be used for payment of duty on any final product. Consequently, the Tribunal upheld the impugned order, dismissing the Appeal brought by the Revenue.