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TMI Blog2024 (6) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... and rule 14 of CENVAT Credit Rules, 2004 respectively, while imposing penalties of like amounts under section 11AC of Central Excise Act, 1944 and rule 15 of CENVAT Credit Rules, 2004 respectively, in order [ order-in-original No: 07/CEX/2012 dated 31st December 2012 ] of Commissioner of Central Excise, Customs & Service Tax, Nashik. The second appeal relating to February 2012 to August 2012 challenges recovery of duty of Rs. 12,69,411 under section 11A of Central Excise Act, 1944, along with applicable interest thereon under section 11AA of Central Excise Act, 1944, besides imposition of penalty of Rs. 6,34,706 under section 11AC of Central Excise Act, 1944 which, though set aside in the impugned order [ order-in-appeal no. NSK-EXCUS-000-APP-328-13-14 dated 27th November 2013 ] of Commissioner of Central Excise & Customs (Appeals), Nashik, continues to be a source of grievance for holding that 'undenatured ethyl alcohol' or 'rectified spirit' is non-excisable and not covered in tariff item 2207 20 00 of Schedule to Central Excise Tariff Act, 1985 after 1st March 2005. 2. 'Molasses', which emerges as a viscous by-product in the process of extracting 'sucrose crystals' or 'sugar' f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to sub-heading 2204 90 respectively of Schedule to Central Excise Tariff Act, 1985, the revised 'Ethyl alcohol and other spirits, denatured, of any strength.' corresponding to heading 2207 of Schedule to Central Excise Tariff Act, 1985 with sole description as 'Ethyl alcohol and other spirits, denatured, of any strength' corresponding to tariff item 2207 2000 of First Schedule and as '-' below the heading, inferred that ' 21.3 Thus, from the plain reading of the 8 digit tariff structure, it can be seen that only de-natured ethyl alcohol and denatured other spirits of any strength are excisable. The subtle change that was effected in the 8 digit tariff is that un-denatured ethyl alcohol commonly known as Rectified Spirit has been kept out of the ambit of the central excise tariff. The aforesaid Ch SHN No.2207 20 00 also accepts that 'ethyl alcohol' and 'other spirits' are different commodities or clusters. ........................... so as to mean that the word 'and' used in tariff entry 2207 20 00 separates /divides the term 'ethyl alcohol' and 'other spirit' due to which the further term 'de-natured' appearing in the entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the appeal on this note but, nonetheless, cannot but approach the case put forth by Learned Authorized Representative with some caution. 5. Learned Consultant appearing for appellant was at pains to draw our attention to the manner in which the amendments enabling the revision, and subsequent notifications giving effect to continuation of exemptions from rates, in the structuring of the Tariff from 1st March 2005 rested on the assurance that, as far as assessees were concerned, it was business as usual. He drew our attention to the amending legislation, the attendant alteration to the notification and circular no. 808/5/2005-CX dated 25th February 2005 of Central Board of Excise & Customs (CBEC) to urge that 'rectified spirits' continued to be excisable. He also drew attention to the erstwhile and amended coverage of the relevant headings in Schedule to Central Excise Tariff Act, 1985. He placed reliance on the decisions of the Tribunal in Commissioner of Central Excise & Customs, Guntur v. Crane Betel Nut Works [2008 (221) ELT 99 (Tri-Bang)] and on the decision of the Hon'ble Supreme Court in Essilor India Pvt Ltd v. Commissioner of Customs, Bangalore [2016 (335) ELT 584 (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and partly utilized for being denatured and cleared thereafter on payment of duty appropriate to the tariff item with corresponding description that matches the goods. It is common ground that the clearance at these two stages is not tainted by allegation of contrariness to law. It is also common ground that this dichotomy of tax treatment - being cleared as a manufactured product without payment of duty before 'denaturing' and not being exempted merely from not being cleared and used in captive consumption - has been cause of this controversy. It is, therefore, necessary for us to attend to the notification impugned in the dispute as well as the process which distinguishes the two . 9. The impugned notification is intended to facilitate 'captive consumption' which, particularly in a continuous integrated manufacturing process, would have involved assessment to duty of central excise at several stages with its own controversies over rate of duty and value that are not exactly not superfluous as the chain of value addition ensures that duty is, in any case, charged on the final value of the goods from the factory of production. Furthermore, the availability of credit of duties pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indeed, the proviso in the impugned notification is about exemption and not about goods that are not 'excisable'; the emphasis placed on 'excisable' by both adjudicating authorities rests upon unfounded premise about its relevance to the issue in dispute and, more especially, without the pre-requisite of 'manufacture' having been determined. There is, thus, no evidence of any goods having come into existence at the intermediate stage except by presumption and application of a taxing law unknown to Central Excise Act, 1944. 11. The tariff structure appended to Central Excise Tariff Act, 1985 underwent alteration for alignment with the Schedule appended to Customs Tariff Act, 1975 which had already classified goods upto the 'eight digit' or 'tariff line' level; this necessitated regroupings and, owing to the constitutional restraints on commodity taxation, erasing of several of the headings, in addition to the ones already done, in chapter 22 of Schedule to Central Excise Tariff Act, 1985. The tariff is mere promulgation of legislative intent to tax goods at specified rate and 'excisable' has relevance for the linkage between section 3 of Central Excise Act, 1944 to the Schedule of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed credit taken on 'molasses' procured from elsewhere and, therefore, has adhered to the injunction on retention of credit of duty paid on goods deployed in manufacture of 'exempted goods' as defined in rule 2 of CENVAT Credit Rules, 2004. The 'molasses' so procured and used in the manufacture of 'denatured spirits' do not fall within the ambit of rule 6 of CENVAT Credit Rules, 2004 and, thus, negates the demand on that count in the order of Commissioner of Central Excise along with appended detriments. 15. We also find support for our view supra from decision of the Tribunal in Bannari Amman Sugars Ltd v. Commissioner of Customs, Central Excise & Service Tax, Mysore [2018 (362) ELT 705 (Tri.-Bang)], holding that '6.1 The Notification No. 67/95 is not available in respect of inputs used in the manufacture of final products which are exempted from whole of duty or chargeable to 'nil' rate of duty. The question for consideration is whether alcohol for human consumption which is not charged to Central Excise duty will fall under either of the above categories. The above question is answered in favour of the appellant in the case of Manakpur Chini Mills Ltd. (supra). The findings rec ..... 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