2019 (3) TMI 943 - AT - Central Excise

Refund of accumulated CENVAT Credit - rectified spirit - case of Revenue is that rectified spirit was non-dutiable product and since appellant was not manufacturing any dutiable final product, the said Cenvat credit was not admissible to them - Held that - The matter is now settled in favour of the appellant in the case of M/S. SHARDA CERAMICS PVT. LTD. VERSUS C.C.E., JODHPUR 2018 (8) TMI 407 - CESTAT ALLAHABAD , where it was held that appellants were manufacturing excisable commodity and therefore they were entitled to avail Cenvat credit which was reversed by the Central Excise officers. The appellant is entitled to refund of the balance amount of ₹ 21,51,812/- - the Adjudicating Authority is directed to refund the same alongwith interest, w.e.f. the date of adjustment i.e. 11 July, 2016 till the date of disbursement - appeal allowed.

Summary

Issues:
1. Refund of demand on sugar bags consumed for re-processing.
2. Refund of fixed deposit receipts in-cashed by Revenue.
3. Eligibility of rectified spirit and Ethyl Alcohol for Cenvat credit.

Analysis:
1. The appellant, a manufacturer of sugar and molasses with a distillery for alcohol, faced a demand of ?3,44,459 on 3973 bags of sugar allegedly consumed for re-processing. The matter was remanded for re-adjudication, leading to the Additional Commissioner dropping the demand in an order dated 22 June 2016.

2. During the proceedings, the Revenue in-cashed fixed deposit receipts amounting to ?28,44,730 in 2011. Following the appellant's success in the re-processing issue, they applied for a refund of ?6,88,918, with the Assistant Commissioner rejecting the balance of ?21,51,812, adjusting it towards Cenvat credit reversal demanded in a separate show cause notice. The appellant later succeeded in the show cause notice matter, establishing rectified spirit and Ethyl Alcohol as eligible for Cenvat credit, leading to the setting aside of the interest amount as well.

3. The Tribunal, in a final order dated 25 June 2018, confirmed the eligibility of rectified spirit and Ethyl Alcohol for Cenvat credit, overturning the demand for credit reversal and interest. Consequently, the appellant was entitled to the refund of the balance amount of ?21,51,812 along with interest from the date of adjustment on 11 July 2016. Despite the pendency of an appeal, the Tribunal directed the Revenue to refund the amount with interest till the date of disbursement, allowing the appeal with consequential benefits.