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2023 (8) TMI 1318 - AT - Central ExciseCaptive Consumption - molasses manufactured and captively consumed for the manufacture of neutral alcohol , rectified spirit which is not appearing in the first schedule to Central Excise Tariff Act, 1985 - denial of N/N. 67/95-CE dated 16.03.1995 as amended - HELD THAT - The issue is squarely covered by the Final Order of Tribunal in the case of M/S MANKAPUR CHINI MILLS LTD., M/S BALRAMPUR CHINI MILLS LTD. VERSUS C.C.E. S.T. -LUCKNOW 2017 (5) TMI 391 - CESTAT ALLAHABAD and BANNARI SMMSN SUGAR LTD VERSUS C.C.,C.E. S. T-MYSORE 2018 (2) TMI 813 - CESTAT BANGALORE , which was affirmed by the Hon ble Apex Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S. DHARANI SUGARS AND CHEMICALS LTD. 2022 (3) TMI 274 - SC ORDER , where it was held that rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item No. 2207 20 00. Appeal allowed - decided in favour of appellant.
Issues Involved:
1. Eligibility for exemption under Notification No. 67/95-CE for molasses captively consumed in the manufacture of ethyl alcohol, ethanol, rectified spirit, etc. 2. Classification and excisability of ethyl alcohol and rectified spirit. 3. Compliance with Rule 6 of CENVAT Credit Rules, 2004. Summary: Issue 1: Eligibility for Exemption under Notification No. 67/95-CE The appellants were denied the benefit of Notification No. 67/95-CE dated 13.06.1995, which grants exemption from payment of duty on intermediary products captively consumed in the manufacture of excisable goods. The Adjudicating Authority alleged that the appellant was manufacturing rectified spirit and Extra Neutral Alcohol using molasses, which are exempted from payment of duty, thus making them ineligible for the exemption. The Tribunal allowed the application for bunching and early hearing of the appeals, noting that the issue was covered by previous decisions. Issue 2: Classification and Excisability of Ethyl Alcohol and Rectified Spirit The appellants argued that ethyl alcohol and rectified spirits are non-excisable products and thus should be considered exempted goods. They cited the decision in Kothari Sugars & Chemicals Ltd. Vs. Comm. of C.Ex., Trichy-2010 (262) ELT 545 (Tri.-Chennai), which stated that undenatured ethyl alcohol is outside the scope of central excise levy and cannot be treated as either exempted goods or chargeable to nil rate of duty. The Tribunal found this argument persuasive, noting that ethyl alcohol and rectified spirit are one and the same commodity and are covered under tariff item No. 2207 20 00. Issue 3: Compliance with Rule 6 of CENVAT Credit Rules, 2004 The appellants submitted that they followed the provisions of Rule 6 of CENVAT Credit Rules, 2004, by reversing the attributable credit of duty availed on chemicals and other inputs used in the manufacture of molasses, a by-product of sugar. They provided statements showing the details of such reversals and submitted ER1 Returns electronically. The Tribunal referred to the decisions in Manakpur Chini Mills Ltd. Vs. CCE-2017 (6) GSTL 188 (T) and Bannari Amman Sugars Ltd. Vs. Commr. of Cus., C.Ex & ST. Mysore reported in 2018 (362) ELT 705 (Tri.-Bang), which supported the appellants' compliance. Conclusion: The Tribunal concluded that the issue was squarely covered by previous decisions, including those affirmed by the Hon'ble Apex Court. Therefore, the appeals were allowed with consequential relief as per law. (Order pronounced in the Open Court on 25/08/2023)
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