2017 (6) TMI 700 - AT - Central Excise

Molasses used captively - benefit of N/N. 67/95-CE dated 16.3.95 - denial on the ground that the same was used in the manufacture of exempted product - time limitation - Held that - while clearing the ethyl alcohol from the factory, manufactured from the molasses, the appellant had discharged 8% of the price of denatured ethyl alcohol - the demand notice issued in the year 2000 for recovery of duty short paid for the period December 1996 to June 1999 on molasses, which was used in the manufacture of ethyl alcohol cleared after discharging 8% of the price, cannot be sustained being barred by limitation - appeal allowed - decided in favor of appellant.

Issues involved:
1. Benefit of Notification No.67/95-CE on molasses used in the manufacture of denatured ethyl alcohol.
2. Claiming exemption on molasses under Notification No.67/95-CE dated 16.3.95.
3. Invocation of extended period for demand notice issued in 2000.
4. Suppression or mis-declaration of facts resulting in non-payment of duty on molasses used captively.

Analysis:
1. The case involved a dispute regarding the benefit of Notification No.67/95-CE on molasses used in the manufacture of denatured ethyl alcohol. The appellants had cleared denatured ethyl alcohol without payment of duty, claiming the benefit of the notification. The Revenue argued that the benefit was not available for the period before the notification's amendment in 2001. The appellants contended that they had continuously discharged 8% of the price of ethyl alcohol and had not suppressed any facts, thus challenging the demand for duty at 18% as per the tariff rate. The Tribunal considered the submissions and found no suppression or mis-declaration of facts, ultimately setting aside the demand notice.

2. The appellants had claimed exemption on molasses under Notification No.67/95-CE dated 16.3.95, stating that molasses emerged as a by-product during the manufacture of sugar and was used in the production of exempted denatured ethyl alcohol. The Revenue argued that the appellants wrongly availed the exemption, leading to the invocation of the extended period for recovery of duty on molasses. However, the Tribunal observed that the appellants had disclosed the use of molasses in the manufacture of ethyl alcohol, cleared after discharging 8% of the price, without suppressing any facts. Consequently, the demand notice issued in 2000 for recovery of duty was deemed barred by limitation, and the impugned order was set aside.

3. The issue of invoking the extended period for the demand notice issued in 2000 was crucial in this case. The Revenue contended that the extended period was rightly invoked due to the appellants' wrongful availing of the exemption on molasses. However, the Tribunal found that there was no suppression or mis-declaration of facts by the appellants, as they had consistently discharged 8% of the price of ethyl alcohol and disclosed relevant information in their returns and invoices. Therefore, the demand notice for recovery of duty for the period December 1996 to June 1999 was held unsustainable due to being barred by limitation.

4. The question of whether there was suppression or mis-declaration of facts resulting in non-payment of duty on molasses used captively was addressed by the Tribunal. After reviewing the submissions and evidence, the Tribunal concluded that the appellants had not suppressed any relevant information and had discharged the required percentage of the price of ethyl alcohol. As a result, the demand notice for recovery of duty on molasses was set aside, and the appeal was allowed with consequential relief as per the law.

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