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TMI Blog2017 (4) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... rises during manufacture of sugar was used as inputs by appellants for manufacture of rectified spirit/denatured spirit. They cleared molasses for captive consumption for manufacture of rectified spirit/denatured spirit under Notification No.67/95-CE dated 16.03.1995. According to the appellants as the molasses were common inputs for rectified spirit (exempted) and denatured spirit (dutiable) they reversed the proportionate credit in terms of Rule 6 of CENVAT Credit Rules, 2004. Department entertained a view, that molasses is not common input for rectified spirit and denatured spirit for the reason that the appellants are manufacturing only rectified spirit from molasses. That they are not entitled to exemption under Notification No.67/95-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me that department has not filed any appeal against this order. 4. On behalf of the assessee, the Ld. Counsel Sh. G. Prahalad submitted that for a different period a show cause notice was issued alleging that assessee has availed irregular credit on molasses for the reason that molasses is not common input for rectified spirit and denatured spirit. The said issue was held in favor of the assessee by the Commissioner (Appeals). The Department filed appeal against this order before the Tribunal and vide Final Order No.1991-1992/2006 dated 28.11.2006 the Tribunal held that though appellant is manufacturing denatured spirit from rectified spirit, molasses is a common input for both these products. That the issue whether appellant is manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used as common input for dutiable and exempted product. They ought to pay duty on molasses at the time of clearance itself since they are manufacturing only exempted product (rectified spirit). Due to the method of reversing proportionate credit, there is delay in payment of duty. Therefore, the show cause notice has been issued demanding interest on the delayed payment of duty and also raising the allegation that they are not eligible for benefit of Notification No.67/95-CE. 7. I have heard the submissions made before me. The foremost contention put forward by Revenue is that appellants are not using molasses for manufacture of exempted as well as dutiable products. That they are clearing molasses which is a byproduct in the manufacture o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption to all capital goods and inputs captively consumed within the factory of production Provided that nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of final products which are exempt from whole of the duty of excise or additional duty of excise leviable thereon or are chargeable to Nil rate of duty, other than those goods which are cleared By a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in Rule 6 of the CENVAT Credit Rules, 2001. 8. From the judgment in the case of Sakthi Sugars Ltd., (supra) it is clear that the benefit of Notification No. 67/95 is available to the manufacture of dutiable and exempted final produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... molasses) in the instant appeals cannot be considered as duty but merely represents the amount under Rule 6. The reversal of amount under Rule 6 should be concurrent with the clearance of the exempted goods and not the clearance of molasses (inputs) for captive use, as erroneously deduced by the lower authority. Ergo, no interest liability exists and the appellant's contention succeeds on merits; the demands for interest have to be set aside in both cases. Since the primary interest demand is itself found unsustainable, the attendant penalty under Rule 27 is automatically rendered legally untenable and have to be set aside in both cases. 9. I find that the Commissioner (Appeals) in the above discussions has considered the law in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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