Admissibility of money credit under Rule 57K read with Notifn. No. 231/87, dated 1-10-1987 in respect of ethyl alcohol used in the manufacture of specified goods - Regarding - Central Excise - 32/90-CX.8

Admissibility of money credit under Rule 57K read with Notifn. No. 231/87, dated 1-10-1987 in respect of ethyl alcohol used in the manufacture of specified goods - Regarding Circular No. 32/90-CX.8 Dated 31-3-1990 [From F. No. 261/12/3/89-CX.8] Government of India Central Board of Excise Customs New Delhi Subject : Admissibility of money credit under Rule 57K read with Notifn. No. 231/87, dated 1-10-1987 in respect of ethyl alcohol used in the manufacture of specified goods - Regarding. It has been brought to the notice of the Board that money credit under Rule 57K is being denied to units who are manufacturing molasses, then alcohol and then chemicals within the same factory on the ground that there is no sale of either molasses or ethyl alcohol manufactured within the same factory and that price is not paid in accordance with condition (ii) to Notifn. No. 231/87-C.E., dated 1-10-1987 and proviso to said condition (ii). The matter has been examined by the Board. It is observed that intention behind the money credit scheme under Notification No. 231/87-C.E., dated 1-10-1987 was basically to give relief of the excise duty paid on the molasses when ethyl alcohol made from such molasses is used in the manufacture of specified chemicals. However, condition(ii) and proviso thereto were added to ensure that duty on molasses is paid at increased rate w.e.f. 1-10-1987. It is therefore felt that money credit should be allowed even in cases where a unit is manufacturing molasses, then the alcohol and then chemicals in the same factory even though a literal interpretation of condition (ii) and proviso thereto of the Notification aforesaid would mean the contrary. Notification No. 231/87 has since been amended by Notification No. 52/89 dated 1-11-1989 so as to remove the anomaly which condition (ii) and proviso thereto has created. Therefore, the problem stands resolved prospectively. However, since the intention of the Government was to grant money credit in the aforesaid case also, Board has decided that money credit should be permitted even prior to 1-11-1989 in cases where molasses, alcohol and chemicals have manufactured by a unit within the same factory if on verification it is proved that duty on molasses has been paid at increased rates w.e.f. 1987. All pending cases may be decided keeping in view the above instructions. Trade and field formations may be informed suitably. Receipt of this letter may please be acknowledged.