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TMI Blog2023 (3) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... iled is not in order. In the case of M/s. Shri Ambika Sugar Ltd. [ 2014 (11) TMI 919 - CESTAT CHENNAI] similar view was taken by the Hon ble Apex Court as reported in COMMISSIONER VERSUS SHREE AMBIKA SUGARS LTD. [ 2015 (12) TMI 1887 - SC ORDER] . In Godavari Sugar Mills Ltd. Vs Commissioner of Central Excise, Belagaum [ 2006 (11) TMI 497 - CESTAT, BANGALORE ] it was held that it is sufficient if CENVAT Credit attributable to inputs in exempted product is reversed or paid. In case on hand, though the appellants have resorted to different method, it is clear that the appellants have not availed CENVAT Credit on inputs in respect of exempted products or non-excisable ENA. Following the proposition laid in the above decisions, it is held that the demand cannot sustain. The impugned order is set aside. Appeal allowed. - EXCISE APPEAL No. 497 of 2012 - FINAL ORDER NO. 40181 / 2023 - Dated:- 17-3-2023 - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Shri P.C. Anand, Consultant - For the Appellant Shri. R. Rajaraman, Assistant Commissioner (A.R) - For the Respondent ORDER Brief facts are that the appellants are e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nand appeared and argued for the appellant. The products manufactured and cleared by the appellants are ethyl alcohol, acetaldehyde, acetic acid, etc. The main input is molasses. The appellant did not avail CENVAT Credit on the quantity of molasses used in production of potable ethyl alcohol (ENA) as this product is not dutiable product. This ENA which was not pure, was denatured, and used in further manufacturing process, resulting in dutiable finished products vig: acetaldehyde. The appellant is eligible to avail Credit on inputs used for manufacture of dutiable product. Instead of resorting to keeping separate accounts for the Credit availed on exempted and dutiable products the appellant has calculated the quantity of inputs used for dutiable products and thus availed CENVAT Credit only in regard to inputs used in the manufacture of dutiable products. The appellant has thus availed only eligible Credit. 3. The Ld. Consultant submitted that the molasses used in the production of DNS is duty paid molasses which fact is not disputed. Every step of the process by which both ENA and DNS are produced is documented and tightly regulated and there is even a staff of the Excise depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-excisable ENA on which no duty is payable. Further even if the 15% impure ENA is denatured also the credit on molasses is not eligible since this denatured alcohol is exempted since captively consumed. 8. In para 4.2 the Commissioner (Appeals) held as under: The appellants have taken the credit on the duty portion of molasses which are used for the manufacture of DNS, whereas the actual input for manufacture of DNS is extra neutral alcohol (ENA), which itself is a product, which are separately taken out and kept in storage tank. Only 8% to 15% of extra neutral alcohol (ENA) is being used for further manufacturing of denature sprit (DNS) and rest quantity is cleared for bottling purpose under State excise control. Therefore credit taken on molasses is not correct to the extent of the molasses is used for manufacture of extra neutral alcohol (ENA), which itself a product and non excisable. The extra neutral alcohol (ENA) is under the state excise control. Therefore as pre Rule 6 of Cenvat credit rules, 2004, the appellants are not eligible to take credit on the Molasses, which is exclusively used for the manufacture of ENA Hence the question of using Cenvat credit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hyl Alcohol including Rectified spirit were removed on payment of an amount equivalent to 6%, on the invoice value in terms of Rule 6 of the Cenvat Credit Rules, 2004. Ethyl Alcohol mainly has an intoxicating agent in alcohol-based liquor for human consumption. Prior to 1-3-2005 of Tariff restructuring from 6 digit to 8 digit Heading No. 2204.90 of the CETA covers Rectified Spirit and ENA, NIL rate of duty. The appellants were eligible to avail the Cenvat credit on the molasses captively used in the manufacture of dutiable and exempted products. The appellants reversed the amount under Rule 6 of the Cenvat Credit Rules, 2004 at the time of clearance of the exempted Denatured Ethyl Alcohol including Rectified spirit. According to Revenue, after restructuring of the Tariff from 6 digit to 8 digit, Denatured Ethyl Alcohol would become non-excisable and therefore the appellants are not eligible to avail the benefit of the exemption Notification No. 67/95-C.E. (supra) in respect of molasses used in the manufacture of Denatured Ethyl Alcohol including Rectified spirit. . 8.12 It is seen from the above, that after re-structuring of Central Excise Tariff from 6 Digit to 8 Digit with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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