2024 (4) TMI 1036 - AT - Central Excise

Exemption for captive consumption - benefit of exemption N/N. 67/95 dated 16.3.1995 - Rectified Spirit - excisable goods or not - covered by the term final product or not - HELD THAT - This Bench has considered almost identical issue, in their own case to hold that the denial of exemption Notification No.67/95 was incorrect, for the reasons discussed therein, by also relying upon an earlier order of Chennai Bench in the case of Sri Ambika Sugars Ltd. 2014 (11) TMI 919 - CESTAT CHENNAI has held 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 impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Whether the Revenue is justified in denying the benefit of exemption Notification No. 67/95 dated 16.03.1995?

Summary:

Issue 1: Denial of Exemption Notification No. 67/95

The appellant, a manufacturer of ethyl alcohol, Rectified Spirit (RS), Ethanol, and Extra Neutral Alcohol (ENA), claimed exemption u/s Notification No. 67/95-CE dated 16.03.1995 for molasses used in the production of RS and ENA. The Revenue contended that post 01.03.2005, RS was omitted from Heading 2207 of the Central Excise Tariff Act, 1985, thus not qualifying as a 'final product' for exemption purposes. A Show Cause Notice dated 21.10.2013 was issued, leading to the confirmation of duty demand by the original authority.

The appellant argued that the issue had been settled in their favor in previous cases, including their own case for a different period by the Chennai Bench of CESTAT. The Tribunal referenced the case of Sri Ambika Sugars Ltd., which held that denial of exemption on molasses captively consumed to manufacture RS and ENA was incorrect. The Tribunal noted that the restructuring of the Tariff from 6-digit to 8-digit did not alter the exemption status of RS and ENA, supported by CBEC Circular No. 808/5/2005-CX dated 25.02.2005.

The Tribunal found that prior to 28.02.2005, RS and ENA were covered under sub-heading No. 2204.90 with NIL duty rate, which post-amendment corresponded to Heading No. 22.07. The Board Circular clarified that the existing duty rates were preserved, and RS and ENA remained exempted goods under Notification No. 3/2005-CE. The Tribunal also referenced the Hon'ble Allahabad High Court's decision in Gularia Chini Mills, which supported the classification and exemption of goods post-restructuring.

The Tribunal concluded that the denial of exemption Notification No. 67/95 on molasses used in the manufacture of RS and ENA was unsustainable. The appeal was allowed, and the impugned order was set aside with consequential benefits as per law.

(Order pronounced in open court on 25.04.2024)