2017 (12) TMI 1276 - AT - Central Excise

Whether ethyl alcohol and rectified spirit are two different commodities or one and the same commodity? Held that - Hon ble Supreme Court in the case of State of Uttar Pradesh Vs M/s Modi Distillery and others 1995 (8) TMI 300 - SUPREME COURT has held that ethyl alcohol and rectified spirit are one and the same - rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item no. 22072000 - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Redrafting of Final Order due to apparent mistakes.
2. Admissibility of CENVAT credit on inputs and capital goods.
3. Classification of rectified spirit under Central Excise Tariff.
4. Interpretation of ethyl alcohol and rectified spirit as one commodity.

Redrafting of Final Order:
The appeal involved a Final Order that was initially passed on 15th December, 2016, dismissing the appeal in favor of the Respondent based on a precedent order. However, apparent mistakes were later identified in the Final Order, leading to a redrafting process. The Final Order was eventually redrafted on 19th June, 2017, to rectify the errors and accurately reflect the pronouncement.

Admissibility of CENVAT Credit:
The case revolved around the admissibility of CENVAT credit on inputs and capital goods used in the manufacturing process of denatured spirit. The Revenue contended that the emergence of rectified spirit, which was not explicitly listed in the Central Excise Tariff, rendered the CENVAT credit inadmissible. The Respondent, a composite unit manufacturing sugar and ethyl alcohol, argued that rectified spirit was essentially ethyl alcohol and fell under the relevant tariff item. The original authority dropped the demand and penalty, leading to the Revenue's appeal.

Classification of Rectified Spirit:
The central issue was the classification of rectified spirit under the Central Excise Tariff. The Revenue argued that rectified spirit did not have a specific entry in the Tariff, making the CENVAT credit inadmissible. However, the Tribunal, after considering the arguments and relevant case laws, concluded that rectified spirit was synonymous with ethyl alcohol and therefore fell under the tariff item covering ethyl alcohol and other spirits denatured of any strength.

Interpretation of Ethyl Alcohol and Rectified Spirit:
The Tribunal analyzed whether ethyl alcohol and rectified spirit were distinct commodities or the same. Referring to a Supreme Court ruling, it was established that ethyl alcohol and rectified spirit were essentially the same, with rectified spirit being purified ethyl alcohol. This interpretation led to the conclusion that rectified spirit, when not intended for human consumption, was indeed ethyl alcohol and should be classified under the relevant tariff item. Consequently, the Tribunal upheld the impugned order, rejecting the Revenue's appeal.

In summary, the judgment addressed the redrafting of the Final Order, the admissibility of CENVAT credit, the classification of rectified spirit under the Central Excise Tariff, and the interpretation of ethyl alcohol and rectified spirit as one commodity, ultimately leading to the rejection of the Revenue's appeal.