2017 (3) TMI 1585 - AT - Central Excise

Classification of goods - rectified spirit - whether ethyl alcohol and rectified spirit are one and the same and is covered under CETH 2207 20 00 or otherwise? - Held that - rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in Tariff Item No. 2207 20 00 - reliance placed in the case of State of Uttar Pradesh v. M/s Modi Distillery and Others 1995 (8) TMI 300 - SUPREME COURT , where it was held that ethyl alcohol and rectified spirit are one and the same - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of Central Excise Tariff regarding rectified spirit and denatured spirit; Admissibility of Cenvat credit on inputs and capital goods for manufacturing denatured spirit.

Analysis:
The case involved a dispute regarding the admissibility of Cenvat credit on inputs and capital goods for manufacturing denatured spirit due to the emergence of rectified spirit during the process. The Revenue contended that rectified spirit did not find a place in the Central Excise Tariff post-1-3-2005, leading to the inadmissibility of Cenvat credit. The appellant argued that rectified spirit was essentially ethyl alcohol and fell under Tariff Item No. 2207 20 00. The Tribunal analyzed the process of manufacturing and referred to previous rulings, including one by the Hon'ble Supreme Court, which established that ethyl alcohol and rectified spirit were synonymous. The Tribunal concluded that rectified spirit, when not intended for human consumption, was indeed ethyl alcohol and thus found a place in the Tariff Item No. 2207 20 00.

The Tribunal highlighted the evolution of the Central Excise Tariff, noting the changes post-1-3-2005, where ethyl alcohol and other spirits denatured of any strength were covered under Tariff Item No. 2207 20 00. The Tribunal emphasized that pre-denatured ethyl alcohol was not considered to be within the Central Excise Tariff post the specified date. By referring to the observations of the Hon'ble Supreme Court in a previous case, the Tribunal established that ethyl alcohol and rectified spirit were considered the same commodity, especially when the rectified spirit was not meant for human consumption. This interpretation led the Tribunal to conclude that rectified spirit, in essence, was ethyl alcohol and was appropriately classified under Tariff Item No. 2207 20 00.

In light of the detailed analysis and the legal precedents cited, the Tribunal held that the show cause notice proposing the recovery of Cenvat credit was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, without any costs.