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TMI Blog2023 (8) TMI 1318X X X X Extracts X X X X X X X X Extracts X X X X ..... rit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item No. 2207 20 00. Appeal allowed - decided in favour of appellant. - HON'BLE MR. P.A. AUGUSTIAN, MEMBER (JUDICIAL) And HON'BLE MR. PULLELA NAGESWARA RAO, MEMBER (TECHNICAL) Mr. M.N. Bharathi, Advocate for the Appellant Mr. Dyamappa Airani, Authorised Representative for the Respondent ORDER Per : P.A. Augustian The appellants are engaged in the manufacture of sugar and in the course of manufacture of sugar, molasses emerges as a byproduct. Molasses is captively consumed in the manufacture of dutiable products like Ethyl Alcohol, Ethanol, denatured spirit and exempted products like rectified spirit etc. In the course of the manufacture of rectified spirit, carbon dioxide also emerges which is also liable to duty. The appellants used to sell molasses on payment of duty as and when there is demand of those. However, for the molasses captively used for further manufacture of Ethyl Alcohol, Ethanol, Rectified Spirit, ENA, Denatured spirit etc., the appellants were availing the benefit of Notification No.67/95-CE dated 13.06.1995 as amended, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 to Nov 2015 Date of Show Cause Notice 21.01.2015 04.08.2015 28.4.2016 Date of Order-in-Original 23.12.2015/ 04.01.2016 23.12.2015/ 04.01.2016 31.10.2016 Demand of Central Excise duty u/s 11A(1) of CEA, 1944 Rs.84,97,500/- Rs.2,26,76,250/- Rs.2,28,75,000/- Interest u/s 11AA of the CEA, 1944 As applicable As applicable As applicable Penalty u/r 25 of the CER, 2002 Rs.84,97,500/- Rs.2,26,76,250/- Rs.45,00,000/- Sri Chamundeswari Sugars Ltd. Appeal Nos E/22649/2014 E/23871/2014 E/20435/2016 E/20436/2016 Period of Dispute Dec 2012 to July 2013 Aug 2013 to Mar 2014 Apr 2014 to Sept 2014 Oct 2014 to Mar 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndenatured ethyl alcohol will be covered under final products under coloum 3 of the table as the same has been included in the tariff schedule under Chapter 22. However, to attract the mischief of the proviso which denies the exemption for exempted and nil rated final product, the goods must be excisable. The excisable goods are defined in the Central Excise Act, 1944 as goods specified in the tariff schedule as being subject to a duty of excise. Since undenatured ethyl alcohol is outside the purview of the central levy, it is not subject to a duty of excise under the Central Excise Act, 1944 and hence, not excisable. As a corollary, the same cannot be treated as either exempted goods or chargeable to nil rate of duty. 6. The Appellant further submits that the process of manufacture of sugar carried out in their factory is a continuous process during which the molasses emerges and is removed to their own distillery for further fermentation and distillation process, which result in emergence of ethyl alcohol. Ethyl alcohol, which is also known as rectified spirit is an excisable goods classifiable under CETH 22072000, and thus finds specific mention in the CETA after its amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-heading 2204.10 covered denatured ethyl alcohol of any strength and chapter sub-heading No. 2204.90 covered ethyl alcohol except alcoholic liquor for human consumption and undenatured ethyl alcohol. From 1-3-2005 tariff item No. 2207 20 00 covered ethyl alcohol and other spirits denatured of any strength. This led the Central Excise authorities to think that pre-denatured ethyl alcohol does not find place in Central Excise Tariff. We find that the show cause notice contends that rectified spirit is manufactured in between the process to manufacture denatured spirit and rectified spirit does not find place in Central Excise Tariff with effect from 1-3-2005 and therefore Cenvat credit is not admissible as inputs input services and capital goods going into manufacture of rectified spirit and hence going into manufacture of denatured spirit. Before 1-3-2005, department accepted that rectified spirit is covered under chapter sub-heading No. 2204.90. As stated above, 2204.90 covers ethyl alcohol except one for human consumption and which are undenatured. Therefore, the issue to be decided is whether ethyl alcohol and rectified spirit are two different commodities or one and the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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