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TMI Blog2023 (7) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... 0226 of 2014 - FINAL ORDER No.40612/2023 - Dated:- 26-7-2023 - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Mr. S. Muthuvenkatraman, Advocate - For the Appellant Mr. M. Ambe, Deputy Commissioner (A.R) - For the Respondent ORDER Brief facts are that the appellant is engaged in the manufacture of Denatured Ethyl Alcohol falling under Chapter Heading 2207 20 00 of the Central Excise Tariff Act, 1985 and Rectified Spirit, Extra Natural Alcohol, Anthydrous Alcohol, Impure Spirit etc. using molasses procured from their sister units in Pudukottai, Nellikuppam and Pugalur. The appellant availed cenvat credit of the duty paid on molasses procured from the sister units. During scrutiny of the records and returns filed by the appellant it was noticed that the appellant had paid appropriate duty on the Denatured Ethyl Alcohol falling under Chapter Heading 2207 20 00. However, the Rectified Spirit which is cleared by them being not dutiable, they had paid an amount equal to 6% of the value of Rectified Spirit under Rule 6 (3) (i) of Cenvat Credit Rules, 2004. With effect from 01.03.2005, the Rectified Spirit was omitted from Headi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Supreme Court. In this regard, the Ld. Counsel relied on the following case laws: Dharamsi Morarji Chemical Co Ltd vs Collector - 1996 (86) ELT 538 Tata Engineering and Locomotive Co Ltd vs UOI 1993 (64) ELT 171 As per Rule 4 of Interpretative Rules, undenatured ethyl alcohol (rectified spirit) having strength 80% of volume can be said to be akin to denatured ethyl alcohol and hence classifiable under Tariff heading 2207 20 00 only, but gets exempted under notification 3/2005-CE. Even HSN specifies both types of ethyl alcohol under 2207. Even the Notification No. 3/2005-CE (now superseded by notification 12/2012 CE dated 17.03.2012) issued under Section 5A has prescribed Nil rate of duty against undenatured ethyl alcohol' under Tariff heading 2207 20 00 with description All spirits (other than denatured ethyl alcohol of any strength). Once an exemption is given to a product, the product is otherwise implied to be excisable. The issue whether 'Rectified spirit is non-excisable or not after restructuring of Tariff w.e.f 01.03.2005 was a matter of dispute before the Tribunal in the following cases, wherein, it was held that both rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 22 is the only chapter in which it can be classified. In HSN, under Rule 4 the explanatory note states as follows: i. This Rule relates to goods which cannot be classified in accordance with Rules 1 to 3. It provides that such goods shall be classified under the Heading appropriate to the goods to which they are most akin. ii. In classifying in accordance with Rule 4, it is necessary to compare the presented goods with similar goods in order to determine the goods to which the presented goods are most akin. the presented goods are classified in the same heading as the similar goods to which they are most akin. iii. Kinship can, of course, depend on many factors, such as description, character purpose. Taking into account the above explanatory note in HSN, the appellants would now refer to the description of Heading 2207 as contained in HSN. Undenatured Ethyl Alcohol of an Alcoholic strength by Volume of 80% vol. or Higher, Ethyl Alcohol, and other spirits. Denatured, of any strength'. iv. Undenatured Ethyl Alcohol of an alcoholic strength of 80% and above cannot be used for human consumption. Similarly, Ethyl Alcohol, denatured also cannot be used for human consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand. 6. As regards the availment of credit the Commissioner has failed to understand that the appellants have discharged their obligation under Rule 6 of the Cenvat credit rules and therefore the question of alleging that Cenvat credit has wrongly been availed is not justified. 7. As regards invoking the extended period of time limit, it is settled law that once the department is aware of the facts and once on similar question, a notice had been served for the earlier period larger time limit cannot be extended and penalty cannot be imposed. In the instant case, the show cause notice was issued on 19.07.2013 for the period between April 2010 and September 2012 which clearly indicates that for major period, the demand is beyond the normal period. The Ld. Counsel pointed out that the Commissioner failed to understand how in the facts of the case, while for the earlier period of the Appellant's own Group Companies, the Commissioner (Appeals) had allowed the appeal on the same issue and the demand invoking extended period could be confirmed. Ld. Counsel prayed that appeal may be allowed. 8. Ld. A.R Sri M. Ambe appeared and argued for the Department. It is submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voking extended period is therefore legal and proper. 10. Heard both sides. 11. The issue to be decided in this appeal is whether rectified spirit arising in the course of manufacture of sugar can be considered as excisable goods and whether input credit on molasses used in the manufacture can be availed under Cenvat credit rules? and whether in the facts and circumstances of the case invoking of the extended period of time limit will be in order and consequently whether the imposition of penalty is justified? 12. The very same issue was considered in the appellant s own case along with the cases of Rajashree Sugars and Chemicals Ltd., Dharani Sugars Chemicals Ltd., Shree Ambika Sugars Ltd. The Tribunal vide Final Order No.40789-40799/2014 dt. 20.11.2014 reported in 2016 (343) ELT 462 (Tri.-Chennai) held that the denial of Exemption Notification No.67/95-CE on molasses captively consumed to manufacture Rectified Spirit and Extra Neutral Alcohol (ENA) cannot be justified. Accordingly, denial of credit on molasses was also set aside. The said decision was upheld by the Apex Court as reported in 2022 (379) ELT 556 (SC). Relevant part of the said final order of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aria Chini Mills v. Union of India - 2014 (34) S.T.R. 175 (All.) while dealing with bagasse, which emerged as a residue of sugarcane used as fuel in factory for manufacture of final product would be treated as exempted goods in the context of restructuring of Tariff of 6 digit to 8 digit, observed as under :- 30. It is relevant to mention here that a notification, bearing No. 7/2005-Central Excise (N.T.) was published in Part II, Section 3, sub-section (I) of the Gazette of India, Extraordinary, dated 24-2-2005, which reads as under : In exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules to amend all the rules made under the said section and all the notifications issued under the said rules and for the time being in force on the date of commencement of the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005), except as respects things done or omitted to be done before such amendments, namely:- 1.(1) These rules may be called the Central Excise (Removal of Difficulties) Rules, 2005. (2) They shall come into force on the date of the commencement of the Central Excise Tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... First or Second Schedule and which are subjected to duty of excise, can only be treated as excisable goods. A proposition has also been accepted by the Commissioner in its findings. A perusal of Section 2(d) of Central Excise Act shows that the excisable goods are only those goods which are subjected to duty of excise as specified in the First Schedule or Second Schedule of the Central Excise Tariff Act. Since Column of rate of duty is blank, therefore, in view of Section 2 of the Central Excise Tariff Act, 1985, electrical energy is not being subjected to excise duty for the purposes of being excisable goods under Section 2(d) of the Central Excise Act. Furthermore, Rule 6 of the 2004 Rules, which is applicable only to excisable goods, can alone be treated as exempted goods for the purposes of Rule 6(3) of 2004 Rules, does not apply to electrical energy. . . 8.9 The learned AR for Revenue relied upon the decision of the Hon ble Bombay High Court in the case of Niphad Sakhar Karkhana Ltd. v. CCE - 2014 (300) E.L.T. 66 (Bom.). In that case, the assessee filed appeal along with stay application before the Tribunal. By stay order, the Tribunal directed the assessee to pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Duty and Vend Fee, have by order, MS. No. 662 Home, Prohibition and Excise III Department dated 4-9-1992 prescribed the collection of an Administrative Service Fee of Rs. 0.50 paise per bulk litre of spirit produced in the distillery before the spirit in issued from the distillery, to cover the service charges including expenditure on staff. The statements as referred by the learned AR are in this context. 8.11 The learned AR submits that the Table of the Notification No. 67/95-C.E. referred the Cenvat Credit Rules, 2001 and not Rules, 2004. In this case, we find that the adjudicating authority accepted that prior to 1-3-2005, the appellants are eligible for the benefit of exemption Notification No. 67/95 and therefore, the submission of the learned AR for the Revenue has no merit. Apart from that, the Hon ble Supreme Court in the case of Vikram Cement Ltd. - 2006 (194) E.L.T. 3 (S.C.) held that the schemes of Modvat and Cenvat credit are not different. 8.12 It is seen from the above, that after re-structuring of Central Excise Tariff from 6 Digit to 8 Digit with effect from 1-3-2005, Rectified Spirit and ENA are exempted by Notification No. 3/2005-C.E. (supra) an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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