2023 (9) TMI 712 - AT - Central Excise

Exemption benefit under N/N. 67/95-CE dt. 16.03.1995 as amended - captively consumed molasses - HELD THAT - The Tribunal in the case of RAJSHREE SUGARS AND CHEMICALS LTD. AND OTHERS VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY AND OTHERS 2014 (11) TMI 919 - CESTAT CHENNAI held that the denial of exemption notification 67/95 on molasses captively consumed to manufacture Rectified Spirit DNA cannot be justified. The demand cannot sustain and requires to be set aside - Appeal allowed.

Summary

Issues Involved:
1. Whether the exemption u/s Notification No. 67/95-CE is applicable to molasses captively consumed for the production of Rectified Spirit.
2. Validity of the demand for duty on molasses captively used from July 2012 to March 2013.

Summary:

Issue 1: Exemption u/s Notification No. 67/95-CE
The appellant, engaged in the manufacture of Sugar, Molasses, and Denatured Ethyl Alcohol, availed exemption u/s Notification No. 67/95-CE for molasses captively consumed in the production of Rectified Spirit. The department contested this, arguing that Rectified Spirit is not excisable and does not qualify as a 'finished product'. The Tribunal referenced its previous decision in the appellant's own case and similar cases (Shree Ambika Sugars Ltd., Rajashree Sugars and Chemicals Ltd., Dharani Sugars & Chemicals Ltd.) where it was held that the denial of exemption on molasses captively consumed for manufacturing Rectified Spirit and DNA is unjustified. The Tribunal reiterated that post restructuring of the Central Excise Tariff from 6 to 8 digits, Rectified Spirit and ENA are exempted goods as per Notification No. 3/2005-CE.

Issue 2: Validity of Demand for Duty
A Show Cause Notice (SCN) was issued demanding duty on molasses captively used from July 2012 to March 2013. The original authority confirmed the demand, interest, and imposed penalties. However, the Tribunal, following its previous rulings and the Apex Court's upholding of these decisions, found the demand unsustainable. The Tribunal emphasized that the restructuring of the tariff and subsequent clarifications by CBEC and judicial precedents support the exemption claim.

Conclusion:
The Tribunal set aside the impugned order, concluding that the demand for duty on captively consumed molasses is unsustainable. The appeal was allowed with consequential reliefs, if any.