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2018 (2) TMI 1607 - AT - Central ExciseCENVAT credit - inputs, input services and capital goods, which has been gone in manufacture of the de-natured Spirits - Held that - identical issue came up before this tribunal in the case of Bajaj Hindusthan Sugar Ltd. 2016 (8) TMI 386 - CESTAT ALLAHABAD , where it was held that ethyl alcohol and rectification spirit are one and the same. Hence,the rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item no. 22072000. Cenvat credit cannot be denied to the appellant on inputs/input services used in manufacturing of sugar and molasses, wherein de-natured Spirits emerges - appeal allowed - decided in favor of appellant.
Issues:
1. Early hearing of appeals based on recurring issue. 2. Denial of CENVAT credit on inputs for manufacturing de-natured Spirits. Analysis: 1. The appellant filed applications for early hearing of appeals citing a recurring issue already decided. Both parties agreed to dispose of both appeals together due to identical facts. The appellant, a composite unit with a sugar mill and distillery division, manufactures various products including ethyl alcohol and denatured spirit. The revenue contended that post-01.03.2005, rectified spirit was not listed in the Central Excise Tariff, affecting CENVAT credit on inputs for manufacturing denatured spirit. Show cause notices were issued, demanding duty, interest, and penalties. The tribunal considered a similar case involving Bajaj Hindusthan Sugar Ltd., where it was observed that rectified spirit is essentially ethyl alcohol, covered under the tariff item no.22072000. The tribunal held that CENVAT credit cannot be denied for inputs used in the production of de-natured Spirits, as it had already been decided in a previous case. 2. The tribunal's decision was based on the understanding that rectified spirit and ethyl alcohol are synonymous, as per the observation of the Hon'ble Supreme Court in a previous case. The tribunal referred to the ISI specifications, which classified ethyl alcohol into different types for beverages and industrial purposes. Rectified spirit, defined as purified spirit with a strength of at least 95% ethyl alcohol, was considered equivalent to ethyl alcohol. Consequently, the show cause notice denying CENVAT credit on inputs for manufacturing de-natured Spirits was deemed unsustainable. The tribunal set aside the impugned orders and allowed the appeals with consequential relief, following the precedent set in the Bajaj Hindusthan Sugar Ltd. case. This comprehensive analysis of the judgment highlights the issues of early hearing based on recurring matters and the denial of CENVAT credit on inputs for manufacturing de-natured Spirits. The tribunal's decision, supported by legal precedents and interpretations, provides clarity on the applicability of CENVAT credit in such cases, ensuring a fair outcome for the appellants.
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