2017 (3) TMI 1152 - HC - Central Excise

MODVAT credit - rectified spirit - quantification of credit - Held that - the respondent assessee is entitled to claim Modvat credit on the levy molasses only upto the extent of 8% of the value of rectified spirit being cleared for manufacture - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues involved:
Interpretation of MODVAT credit rules for levy molasses used in manufacturing non-excisable products.

Analysis:
The High Court addressed seven questions of law raised in the Central Excise Appeal no. 248 of 2009. The first issue was whether MODVAT credit could be claimed for levy molasses used in manufacturing country liquor, a non-excisable product under state excise control. The second question related to the distinction between free sale molasses and levy molasses used in manufacturing different final products. The third issue was about the admissibility of MODVAT credit on reserve quantity of levy molasses allotted by State Excise Authorities. The fourth question focused on the tribunal's failure to consider MODVAT credit on levy molasses. The fifth issue pertained to the misapplication of a previous tribunal order in a similar case. The sixth question queried the applicability of Rule 57AD to levy molasses used exclusively in manufacturing country liquor. The seventh and final issue was whether MODVAT credit could be claimed for inputs used in manufacturing non-excisable final products.

The tribunal's order, based on a previous case, allowed MODVAT credit on levy molasses used for manufacturing non-excisable products. The High Court noted that the matter had been previously remanded to determine the amount payable as per Rule 57CC and the question of imposing penalties. It was established that the respondent was entitled to claim MODVAT credit up to 8% of the value of rectified spirit cleared for manufacturing Indian Made Foreign Liquor (IMFL). The court confirmed the respondent's entitlement to this MODVAT credit.

Given the settled disputes regarding the entitlement to MODVAT credit, specifically up to 8% of the value of rectified spirit, the High Court found that the respondent was entitled to this credit. As there was no dispute over the quantification of the MODVAT credit, the court relied on a previous decision to dismiss the appeals. The judgment concluded by dismissing the appeals without costs, as the matter had been effectively resolved based on previous decisions.