2018 (2) TMI 813 - AT - Central Excise

Benefit of N/N. 67/95 - denial on the ground that molasses has been consumed in the manufacture of non-excisable ethyl alcohol - Held that - rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item no. 22072000 - appeal allowed - decided in favor of appellant.

Summary

Issues:
Levy of Central Excise duty on molasses consumed within the factory for the manufacture of alcohol for human consumption under Notification No.67/1995-CE.

Analysis:
The appellant, engaged in sugar manufacturing, utilized molasses for producing alcohol fit for human consumption and dutiable products like denatured spirit. The dispute arose over the denial of exemption under Notification No.67/1995 for molasses consumed in manufacturing non-excisable ethyl alcohol. The appellant paid the duty under protest and sought refunds, which were denied by the department, leading to the appeal.

The appellant argued that the molasses were used in a continuous process to produce ethyl alcohol, falling under CETH 2204.90, which was supported by precedents like Manakpur Chini Mills Ltd. case. The Tribunal had previously extended the benefit of the Notification for molasses captively consumed. On the other hand, the Department contended that molasses were used for manufacturing alcohol for human consumption, which was exempt from Central Excise duty but liable for State Excise duty.

After hearing both sides and examining the records, the Tribunal noted the core issue of duty liability on molasses consumed for producing alcohol for human consumption. The Notification did not cover inputs used in final products exempted from duty or charged at nil rates. Relying on the Manakpur Chini Mills Ltd. case, the Tribunal held that ethyl alcohol for human consumption was not subject to Central Excise duty and fell under the exempted category, thus favoring the appellant's claim for exemption.

Following the precedent and the Tribunal's decision, the impugned order was set aside, and the appeal was allowed in favor of the appellant. The Tribunal emphasized the equivalence of ethyl alcohol and rectified spirit, concluding that rectified spirit not meant for human consumption was, in essence, ethyl alcohol, thereby supporting the appellant's position and granting relief.

In conclusion, the Tribunal's detailed analysis and reliance on legal precedents led to the favorable decision for the appellant regarding the levy of Central Excise duty on molasses used in the manufacture of alcohol for human consumption under Notification No.67/1995-CE.