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TMI Blog2024 (7) TMI 1163X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from 01.03.2005, rectified spirit, extra neutral alcohol etc. were cleared without payment of duty as exempted goods by Notification No. 03/2005-CE dated 24.02.2005 and Notification No. 12/2012 dated 17.03.2005. The adjudicating authority has denied the benefit of Notification No. 67/2005 on the view that after the restructuring of Tariff, the rectified spirit and extra neutral alcohol were not mentioned in the Tariff. It has been consistently held by Tribunals and High Courts that after restructuring of Tariff, no item has been excluded from the Tariff. The Board Circular No. 808/5/2005-CX dated 25.02.2005 was also relied. It has been clarified by Board that rectified spirit and extra neutral alcohol are covered under subheading 22 07 2000 after restructuring of the Tariff. Thus, it will be covered under Chapter 22. The above decision of the Tribunal has been affirmed and upheld by the Hon ble Apex Court as reported in Commissioner of CE ST versus Dharani Sugars Chemicals Ltd. [ 2022 (3) TMI 274 - SC ORDER] . The demand, interest and penalties cannot sustain. The impugned order is set aside - Appeal allowed. - HON BLE MS. SULEKHA BEEVI. C.S., MEMBER (JUDICIAL) AND HON BLE MR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art from molasses, the appellant has availed credit on various other inputs and input services which are used in the manufacture of non excisable goods. The appellant therefore, is liable to reverse the credit taken on such inputs/input services. 4. Further, the appellant has taken credit on capital goods used in the distillery unit which are used in the manufacture of above non excisable goods. The appellant is not eligible to avail credit on capital goods used exclusively in the manufacture of non excisable goods. 5. The appellant has availed credits on inputs and input services used in generation of electricity and steam which is used in the manufacture of above excisable goods. The appellant is not eligible to avail such credit. 6. It appeared to the department that the appellant is not eligible to avail the exemption provided in Notification 67/95 and is liable to pay duty on the molasses manufactured and cleared for captive consumption. So also, they are not eligible to take credit on molasses procured from outside, other inputs, input services and capital goods used in the manufacture of said non excisable goods. 7. On the basis of the above the appellant was issued three se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. 03/2005-CE dated 24.02.2005 and Notification No. 12/2012 dated 17.03.2005. The adjudicating authority has denied the benefit of Notification No. 67/2005 on the view that after the restructuring of Tariff, the rectified spirit and extra neutral alcohol were not mentioned in the Tariff. It has been consistently held by Tribunals and High Courts that after restructuring of Tariff, no item has been excluded from the Tariff. The Board Circular No. 808/5/2005-CX dated 25.02.2005 was also relied. It has been clarified by Board that rectified spirit and extra neutral alcohol are covered under subheading 22 07 2000 after restructuring of the Tariff. Thus, it will be covered under Chapter 22. The Final Order dated 20.11.2014 passed by Tribunal in the appellant's own case for the previous period has considered the issue in detail and set aside the demand. Though the appeal was filed by the department before the Hon ble Apex Court against such order, the appeal has been dismissed affirming the decision of the Tribunal. It is prayed that this appeal may be allowed. 10. The Ld. AR Shri. N. Satyanarayan, supported the findings in the impugned order. 11. Heard both sides. 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumption and covered by exemption Notification No. 2/94-CE dated 1.3.1994 (Sl. No. 32 of the Table) exempted all goods, other than Ethyl Alcohol of any strength, denatured under sub-heading 2204.00 nil rate of duty. (II) Prior to 1.3.2005, Note 1 of Chapter 22 provides that this Chapter does not cover alcoholic liquors for human consumption . The relevant portion of Heading No. 22.04 is reproduced below:- Heading No. Sub-heading Description of goods (1) (2) (3) 22.04 2204.10 2204.90 Ethyl Alcohol of any strength whether denatured or not, but not including alcoholic liquor for human consumption -Denatured ethyl alcohol of any strength - Other NIL Rectified Spirit and ENA covered under Sub-heading No. 2204.90, NIL duty. (III) After re-structuring of Tariff from 6 digit to 8 digit, with effect from 1.3.2005, Note 4 of Chapter 22 states that this Chapter does not cover alcoholic liquor for human consumption . Heading No. 2204 is shown as blank. Heading 2207 covers ethyl alcohol and other spirits, denatured of any strength . The relevant portion of Heading 2207 is reproduced below:- Heading No. Description of goods Rate of Duty (1) (3) (4) 2207 2207 10 2207 10 11 2207 10 19 2207 10 90 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scription of Inputs Description of final products (1) (2) All goods falling under the First Schedule to the Central Excise Tariff Act 1985 (5 of 1986) other than (light diesel oil, high speed diesel oil) and motor spirit, commonly known as petrol. All goods falling under the First Schedule to the Central Excise Tariff Act 1985 ( 5 of 1986), other than matches. 8.3 We find that the present dispute is emerged due to restructuring of the Tariff from 6 digit to 8 digit. CBEC vide Circular No. 808/5/2005-CX dated 25.2.2005 regarding implementation of Tariff from 6 Digit to 8 Digit, clarified as under:- Implementation of the Central Excise Tariff (Amendment) Act, 2004 (8- Digit Classification Code)- Clarification regarding. I am directed to draw your attention to this Department's Notification No. 6/2005-CE (NT) dated 24.2.2005, Issued from F. No. 4/3/2002-CX.I (Part-II), which notifies that the Central Excise Tariff (Amendment) Act, 2004 will come into force with effect from 28th February 2005. The said Act is being uploaded on the CBEC website, (www.cbec.gov.in). 2. Accordingly, all the field officers must ensure implementation of the amended Tariff Act (including 8-digit classific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05), 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 Tariff (Amendment) Act, 2004 (5 of 2005). 2. In each of the rules made under Section 37 of the Central Excise Act, 1944 (1 of 1944), and in each of the notifications issued under these rules, for any reference to the Chapter, heading or sub-heading of the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as the case may be, relating to any goods or class of goods, wherever referred to in the said rules or notifications, the corresponding reference to the Chapter, heading or sub-heading or tariff item, of the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as amended by the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005) shall be deemed to have been substituted. No. 4/3/2002-CX.1 (Pt.II) Abhay Kumar Srivastav Deputy Secretary to the Government of India Note: This notification intends to take care of the technical changes adopted in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in the case of Gularia Chini Mills (supra), that the restructuring of Tariff from 6 digit to 8 digit with effect from 1.3.2005 would not involve any substantive change in the existing rules. It was taken care of the technical changes adopted in the numbering scheme for central excise classification through the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005). From the Legislative changes of Chapter 22 as mentioned above, it is clear that Chapter 22 does not cover alcoholic liquor for human consumption. Department accepted that prior to 1.3.2005, Rectified spirit was nil rate of duty under sub-heading No. 2204.90. After the introduction of 8 digit classification with effect from 1.3.2005, Heading 2207 covers ethyl alcohol and other spirits, denature, of any strength. On perusal of the impugned order, we find that the appellant contended before the Adjudicating authority that Rectified Spirit with 95% strength was removed from the factory. It cannot be alcoholic liquor for human consumption. Both Rectified Spirit and Denatured Ethyl Alcohol are only varieties of Ethyl Alcohol As per Dictionary meaning, Rectified Spirit is distilled Ethanol with only 4.43% water and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be said that Molasses is used only in the manufacture of Rectified Spirit. In other words, Molasses is used as a common input in the manufacture of exempted Rectified Spirit as well as dutiable Carbon Di-Oxide and Denatured Spirit. Hence, in terms of Rule 6 of Cenvat Credit Rules, if the credit on molasses used in or in relation to the manufacture of the said Rectified Spirit is reversed, there Is no violation of any provisions of law and the credit taken on Molasses cannot be denied. This issue is covered by the decision of this Bench In the case of NCS Distilleries/Estates Pvt. Ltd. v. CCE, Visakhapatnam 2007 (207) E.L.T. 400 (Tri.- Bang.) and the Final Order Nos. 56 to 59/2007 dated 30-11- 2006 [2007 (212) E.L.T. 234 (Tribunal)) in the case of The Godavari Sugar Mills Ltd. Others v. CCE. It is on record that the appellants had reversed total Cenvat credit of Rs. 1,22,49,550/- attributable to the molasses used in or in relation to the manufacture of 3073155 Itrs. of Rectified Spirit cleared without payment of duty. 8.7 In the case of CCE Vs. M/s Bazpur Cooperative Sugar Factory Ltd. 2014-TIOL-1733-HC-UKHAD, the Hon'ble Uttarkhad High Court held that Rectified spirit attrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion refers to all spirits would be read with reference to sub-heading No. 2207 2000. In our considered view, exemption Notification would be read independently. We have already discussed above that the expression all spirits has a wide meaning, irrespective of whether denatured or not. Taking into account of restructuring of the Tariff from 6 digit to 8 digit, we find that the position of sub-heading 2204.20 nil rate of duty is corresponding to Notification No. 3/2005. We have also noticed that the appellants discharged the obligation under Rule 6 of the CENVAT Credit Rules by paying 6% of the invoice value on the clearance of the Rectified spirit. Thus, the appellants are eligible to avail the benefit of Notification No. 67/95-CE dated 16.3.1995 in respect of molasses used in the manufacture of Rectified spirit and ENA. 14. The above decision of the Tribunal has been affirmed and upheld by the Hon ble Apex Court as reported in Commissioner of CE ST versus Dharani Sugars Chemicals Ltd., 2022 (379) ELT 556 (S.C.) 15. The Tribunal in the case of EID Parry India Limited (supra) by Final Order No. 40464/2024 dated 25.04.2024 has applied the very same decision and held that the demand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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