2018 (9) TMI 1352 - AT - Central Excise

Reversal of CENVAT Credit - manufacture of Denatured Spirit, Rectified Spirit and Ethyl Natural Alcohol - Revenue entertained a view that instead of clearing the said spirits in terms of provisions of Rule 6 (3) (b), the assessee should have reversed the credit availed in respect of Molasses, which stands utilized in the manufacture of the said Spirit - Held that - An identical issue stands considered by the Tribunal in the case of Commissioner of Central Excise, Salem, Vs M/s Salem Co-Operative Sugar Mills Ltd. 2016 (8) TMI 942 - MADRAS HIGH COURT laying down that in respect of clearance of Rectified Spirit, Un-denatured Ethyl Alcohol and Ethyl Natural Alcohol, there was not even need to pay 8% or 10% of the value of the said goods in terms of the Rule 6 (3) (b). There is no justifiable reason to uphold the demand even for the period up to 01.03.2005. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Disposal of appeals filed by the assessee and revenue arising from the same impugned order.
2. Utilization of Cenvat credit on duty paid molasses for manufacturing different types of spirits.
3. Dispute regarding reversal of credit availed in respect of molasses for the manufacture of spirits.
4. Interpretation of Rule 6 (3) (b) of Cenvat Credit Rules.
5. Comparison with previous Tribunal decisions and Supreme Court's decision.
6. Decision on setting aside the demand for the period up to 01.03.2005.

Analysis:
The judgment of the Appellate Tribunal CESTAT ALLAHABAD involved the disposal of appeals filed by the assessee and revenue concerning the same impugned order passed by the Commissioner of Central Excise. The appellants were involved in manufacturing Denatured Spirit, Rectified Spirit, and Ethyl Natural Alcohol using duty paid molasses and availing Cenvat credit for the same. The revenue contended that the appellants should have reversed the credit availed on molasses used in manufacturing spirits. The Commissioner upheld the denial of credit up to 01.03.2005 but dropped the demand for the period post 01.03.2005, leading to appeals from both sides.

The Tribunal referred to previous decisions in similar cases, such as Commissioner of Central Excise, Salem, Vs M/s Salem Co-Operative Sugar Mills Ltd. and M/s Bajaj Hindusthan Sugar Ltd. Vs Commissioner of Central Excise, Lucknow. These decisions highlighted that there was no need to pay 8% or 10% of the value of the goods or reverse Cenvat credit for certain spirits manufactured from molasses. The Tribunal's findings were based on the Supreme Court's decision in the case of State of Uttar Pradesh Vs Modi Distillery.

Ultimately, the Tribunal found no justifiable reason to uphold the demand even for the period up to 01.03.2005, setting it aside and allowing the appeal filed by the appellant. Consequently, the revenue's appeal became infructuous as there was no demand to confirm for the period post 01.03.2005. Both appeals were disposed of accordingly.