2017 (3) TMI 352 - AT - Central Excise

CENVAT credit - Molasses - inputs - input services - capital goods - manufacture of rectified spirit - Held that - the issue in the instant appeal is no more res-integra and is covered by the earlier decision passed by this Tribunal in the appellant s own case M/s Bajaj Hindusthan Sugar Ltd. Versus Commissioner of Central Excise, Lucknow 2016 (8) TMI 386 - CESTAT ALLAHABAD , where the credit was allowed on similar issue - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Admissibility of Cenvat Credit on manufacturing non-excisable products using Molasses as input.
2. Availing Cenvat Credit on Capital Goods, input, and input services.
3. Applicability of Notification No. 67/1995-CE.
4. Accumulation of Cenvat Credit beyond the point of emergence/clearance of Rectified Spirit.
5. Irregular Cenvat Credit availed on Molasses, inputs, capital goods, and input services.

Issue 1: The appellant, a sugar unit with a distillery, manufactured non-excisable products like Rectified Spirit (RS), Extra Neutral Alcohol (ENA), Power Alcohol, and Absolute Alcohol using Molasses as input. The Cenvat Credit chain was questioned as RS was considered non-excisable, leading to the denial of accumulated Cenvat Credit beyond the point of RS clearance.

Issue 2: The appellant availed Cenvat Credit on Capital Goods, input, and input services as per Rule 3 of Cenvat Credit Rules, 2004. However, the Revenue noticed irregular Cenvat Credit availed on Molasses, inputs, capital goods, and input services, leading to a dispute regarding the admissibility of such credits.

Issue 3: The appellant claimed exemption under Notification No. 67/1995-CE for Molasses either from their own sugar factory or purchased from outside, subject to excisability of the final product. The benefit of the notification could only be availed when the final product was excisable, raising questions about compliance with the notification conditions.

Issue 4: The appellant accumulated Cenvat Credit on Molasses, inputs, capital goods, and input services used in the distillery division for manufacturing Rectified Spirit, which was deemed non-excisable. The admissibility of such accumulated credit beyond the RS clearance point was a key contention in the case.

Issue 5: The Revenue alleged irregular Cenvat Credit availed by the appellant on Molasses, inputs, capital goods, and input services during a specific period. The dispute centered on the legitimacy of the Cenvat Credit claimed, leading to a detailed examination of the credits availed and their compliance with relevant regulations.

In a detailed analysis, the Tribunal referred to a previous ruling in the appellant's case, where it was held that Rectified Spirit was equivalent to ethyl alcohol and thus admissible under the Central Excise Tariff. Following this precedent, the Tribunal set aside the impugned order, allowing the appeal with consequential benefits as per the law. The decision emphasized the equivalence of ethyl alcohol and Rectified Spirit, leading to the dismissal of the Revenue's contentions regarding the inadmissibility of Cenvat Credit on the manufacturing process involving Molasses and non-excisable products.