2018 (8) TMI 407 - AT - Central Excise

Refund of accumulated CENVAT Credit - rectified spirit - case of Revenue is that rectified spirit was non-dutiable product and since appellant was not manufacturing any dutiable final product, the said Cenvat credit was not admissible to them - Held that - The appellants were manufacturing excisable commodity and therefore they were entitled to avail Cenvat credit which was reversed by the Central Excise officers - refund of credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Admissibility of Cenvat credit on molasses used in manufacturing rectified spirit
- Classification of rectified spirit as a dutiable product
- Entitlement to refund of Cenvat credit

Analysis:
1. Admissibility of Cenvat credit on molasses used in manufacturing rectified spirit:
The appellants were manufacturing sugar, molasses, and rectified spirit, availing Cenvat credit of Central Excise duty paid on molasses. However, the Central Excise officer reversed the Cenvat credit, stating that rectified spirit is non-excisable. The appellant applied for a refund, which was rejected in the Order-in-Original. The Commissioner (Appeals) also rejected the appeal, stating that since rectified spirit was non-dutiable, the Cenvat credit was not admissible. The Tribunal, after considering arguments, held that the appellants were manufacturing an excisable commodity, thus entitled to the Cenvat credit, directing the refund of the reversed amount.

2. Classification of rectified spirit as a dutiable product:
The main contention was whether rectified spirit and Ethyl Alcohol are the same commodity. The appellant relied on a precedent decision to argue that Ethyl Alcohol is excisable, and as rectified spirit and Ethyl Alcohol are considered the same, they were entitled to the refund claim. The Revenue's representative also agreed that the issue was covered by the case law cited by the appellant. The Tribunal, after reviewing the submissions and record, concluded that the appellants were indeed manufacturing an excisable commodity, thereby justifying their entitlement to the Cenvat credit.

3. Entitlement to refund of Cenvat credit:
In light of the above analysis, the Tribunal allowed the appeal, granting consequential relief to the appellant. It directed the Original Authority to either refund the Cenvat credit amount or re-credit it, along with due interest. The decision highlighted the importance of proper classification and understanding of excisable commodities in determining the admissibility of Cenvat credit, ensuring fair treatment for manufacturers in such cases.