2007 (9) TMI 97 - AT - Central Excise

In course of mfg. Sugar, Extra Neutral Alcohol which is an exempted goods is also produced Credit utilized on molasses reversed by paying 8% of value of impugned good No evidence to show that said amount of 8% had been collected from customers Demand not sustainable

Summary

Issues:
Violation of Rule 57CC and Section 11D of the Central Excise Act, 1944.

Analysis:
The appeal was filed by the revenue against the order-in-appeal, where it was noted that the respondents were manufacturing "Extra Neutral Alcohol" using molasses on which Modvat credit was availed. The authorities observed that the amount reversed under Rule 57CC was collected by the respondents from their customers in violation of Rule 57CC and Section 11D. The adjudicating authority confirmed the demand under Section 11D and imposed penalties under relevant rules.

The respondent appealed against the order, and after a series of proceedings, the Tribunal set aside the Commissioner (Appeals) order and remanded the matter for fresh determination. The Commissioner (Appeals) subsequently set aside the order of the adjudicating authority and allowed the appeals of the assessee.

During the hearing, the Joint CDR argued that the respondents, having collected the reversed amount, were liable to pay under Section 11D as it represented excise duty. However, it was noted that there was no evidence to show that the respondents had collected the amount representing excise duty from their customers. The purchase order provided by the purchaser only indicated that the price included Central Excise duty, but it was not proven that the respondents collected this amount as excise duty.

Considering the submissions and records, the Tribunal found that the issue at hand was narrow. It was established that the respondents had utilized duty-paid molasses in manufacturing sugar, leading to the production of exempted extra neutral alcohol. The respondents had evidence showing non-recovery of the 8% amount from their customers. As there was no proof of the respondents collecting the amount as excise duty, the Tribunal concluded that there could be no demand under Section 11D.

Therefore, the Tribunal agreed with the Commissioner (Appeals) and rejected the appeal filed by the revenue. The cross-objection filed by the respondent in support of the impugned order was also disposed of accordingly.