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TMI Blog2017 (12) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of Rectified Spirit (Denatured Ethyl Alcohol and Un-Denatured Alcohol). Apart from captively consuming molasses, they also procure molasses on payment of duty from outside for manufacture of Rectified Spirit. The appellants availed credit of the duty paid on molasses both in-house manufactured as well as that procured from outside. The appellants removed the Un-Denatured Alcohol without payment of duty. The department entertained a view that Un-Denatured Alcohol removed by appellants was excisable exempted goods. Rule 6 of the Cenvat Credit Rules bars the availment of credit on inputs used for exempted goods. The appellants did not maintain separate accounts of the common inputs used for manufacture of dutiable (Denatured Ethyl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of violation of Rule 6(3) (a) (i), alleging wrongful availment of credit on molasses used in manufacture of Rectified Spirit/Denatured Ethyl Alcohol, which is exempted goods is not sustainable. The appellant contended that since the final products are un-denatured product, the appellant need not even pay an amount @10% of the price of the un-denatured product in terms of Rule 6(3)(b). The Tribunal vide the Interim Order No.41001/2014, dated 11.2014 directed the appellant to deposit 10% of the price [in terms of Rule 6(3)(b) and set aside the penalty. Against this order, the appellant filed Civil Miscellaneous Appeal before Hon'ble Madras High Court and the Revenue also filed appeal against the order as the demand raised for contrav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e us for re-adjudication as per remand order of the Hon'ble Madras High Court. On behalf of the appellant, the learned counsel Shri Hari Radha Krishnan reiterated the grounds of appeal and made the following main submissions:- (i) The appellant is manufacturing and clearing both Denatured Ethyl Alcohol and also Un-Denatured Ethyl Alcohol. Molasses is the common input used for both these products. Denatured Ethyl Alcohol is dutiable, whereas, Un-Denatured Ethyl Alcohol is non-dutiable. The department has issued the show-cause notice on the wrong premise that Un-Denatured Ethyl Alcohol is exempted product and that appellant, therefore, is manufacturing both dutiable and exempted product using common input/molasses and, therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant has stated the same in the reply to the show-cause notice. Only to buy peace, the appellant reversed the differential amount and also vacated protest. In spite of assurances that no demand would be further made, the department issued show-cause notice and confirmed the amount imposing equal penalty. That the appellant is not liable to pay the demand raised. 4. Against this, the learned Authorised Representative reiterated the findings in the impugned order. He relied upon the decision in the case of Ugar Sugar Works Ltd. Vs Commissioner of Central Excise, Belgaum reported in 2007 (214) E.L.T. 337 (Tri. Bang.). Rule 6(3)(a)(i) specifically refers to goods falling under heading 22.04 of First Schedule. With effect from 01.03.2005, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts is payable. Rule 6(3) (b) - If the exempted final product is not specified in clause (a) of Rule 6(3), then an amount equal to 10% of the sale price of the exempted product is payable. 7.1 Admittedly, the appellants have not maintained separate accounts. However, after January, 2006, the appellants reversed 10% of the price of Un-Denatured Ethyl Alcohol in terms of Rule 6(3)(b). It is the case of the appellants that they are not bound to pay even this amount and has reversed only on pressure from the department. The department alleges that appellant has to reverse the entire credit attributable to molasses in terms of Rule 6(3)(a). 8. The issue revolves around the question, whether with effect from 01.03.2005 Un-Denatures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Denatured EthyI Alcohol of an strength 16% 2204.90 Other NIL 10. As seen above, the erstwhile Tariff Heading 22.04 covered by both Denatured and Un-Denatured Ethyl Alcohol. The Denatured Ethyl Alcohol was subject to 16% duty. Alcohol other than Denatured Ethyl Alcohol (Un-Denatured Ethyl Alcohol) carried "NIL" rate of duty. In the revised Tariff Schedule (w.e.f. 01.03.2005), there is no corresponding Heading/sub-heading for Undenatured Ethyl Alcohol. The Central Excise as well as Customs Tariff was aligned and in the Customs Tariff Schedule 'Un-Denatured Ethyl Alcohol' falls under Tariff heading 22.08. is left blank without mentioning any goods. From the above, it can be seen that the argu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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