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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 ..... are excisable goods while the other items produced in the distillery unit namely Rectified Spirit, Impure Spirit, Anhydrous Alcohol, Extra neutral Alcohol are non-excisable as they do not find place in the First Schedule to the Central Excise Tariff Act, 1985. 2. The Molasses manufactured in the Sugar Mill Unit is removed to the Distillery unit without payment of duty, availing notification benefit No. 67/95-CE dated 16-03-1995 for use in the manufacture of the above said non-excisable goods. The department was of the view that the benefit of the Notification No.67/95 is available only when the final products suffer duty and the appellant is not eligible to avail the benefit of notification for the reason that the above mentioned products are non excisable goods, as per Section 2 (d) of the Central Excise Tariff Act 1944. In terms of Rule 2 (h) of CCR, 2004 these are not final products and therefore, appellant is not eligible to avail the benefit of said notification and are liable to pay duty of excise on all the clearances of molasses (intermediate product) made from sugar unit and removed to distillery unit and used in the manufacture of non excisable goods. The appellant is li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alties in this regard also. The amount paid by the appellant was ordered to be appropriated. Aggrieved by such order, the appellant is now before the tribunal. 8. The Ld. Counsel Shri. M.N. Bharati appeared and argued for the appellant. They submitted that the issue is no more res integra in view of the decision in their own case vide Final Order No. 4789-4799/2014 dated 20.11.2014. The said decision of the Tribunal was affirmed by the Hon'ble Supreme Court by dismissing the appeal filed by the department as reported in 2022 (379) ELT 556 (S.C.). Further the said decision was followed by the Tribunal in the case of EID Parry India Limited versus Commissioner of GST and CE by Final Order No. 40464/2024 dated 25.04.2024. 9. It is explained that the department has denied the benefit of Notification No. 67/95-CE dated 16.03.1995 in regard to the molasses captively consumed in the manufacture of undenatured ethyl alcohol (rectified spirit), neutral alcohol etc. The department has taken the view that the rectified spirit and extra neutral alcohol are non excisable goods whereas the appellant has submitted that these are excisable but exempted goods. The very same issue was considered b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount 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-CE (supra) in respect of molasses used in the manufacture of Denatured Ethyl Alcohol including Rectified spirit. 8.2 It is appropriate to look into the changes of Chapter 22 and the Notification as under:- (I) As on 1st March, 1994, Chapter 22 covers beverages, vinegar and spirit. Note to Chapter 22 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification No. 67/95-CE (supra), which is as under:- "In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1994) read with sub-section (3) of section3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), (hereinafter referred to as the said Special Importance Act), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts - (i) capital goods as defined in the CENVAT Credit Rules, 2002 manufactured in a factory and used within the factory of production; (ii) goods specified in column (1) of the Table hereto annexed (hereinafter referred to as 'inputs') manufactured in a factory and used within the factory of production in or in relation to the manufacture of final products specified in column (2) of the said Table; From the whole of the duty of excise leviable thereon which is specified in the Schedules to the Central Excise Tariff Act, 1985 (5 of 1986) or additional duty of excise leviable thereon, which is specified in the Schedule to the said Special Importance Act. Provided that nothing contained in this notification shall a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured by the appellant were covered under sub-heading No. 2204.90, NIL rate of duty. After amendment of Tariff (8 Digit Classification Code), Heading 22.04 would correspond to Heading No. 22.07. In the above Board Circular, it has been clarified that Notification No. 3/2005-CE dated 24.2.2005 was issued to preserve the existing duty rate. So, it is clearly evident that the Rectified Spirit existing NIL rate of duty under Sub-heading No. 2204.90 has been covered under Serial No. 14 of the Table appended to Notification 3/2005-CE (supra). In view of the above Board Circular, we find merit in the submission of the learned Advocate that with effect from 28.2.2005, Rectified Spirit and ENA are exempted goods, covered under Notification No.3/2005-CE. The Hon'ble Allahabad High Court in the case of Gularia Chini Mills Vs. Union of India 2014 (34) STR 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have the same eight-digit classification. What we have found is that eight-digit classification helps both trade and revenue department to Identify a particular product and heading under which it falls. Immediately, the number of disputes comes down very sharply....". 31. A perusal of the 'Note' appended below the Notification dated 24-2-2005 as well as the statement made by the Hon'ble Finance Minister in Parliament, as referred to above, clearly establishes that the notification has taken care of the technical changes adopted in the numbering scheme of 6 digits Central Excise classification, which has been aligned with the Customs Tariff of 8 digits with effect from 28-2- 2005. 32. The definition of 'excisable goods' given in Section 2(d) means the goods, which are specified in the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mption Notification. 8.6 The Tribunal in the case of Ugar Sugar Works Vs. CCE 2007 (214) ELT 33 held that with effect from 1.3.2005, Rectified spirit along with denatured spirit would cover under sub-heading No. 2207 2000 and it cannot be said that with effect from 1.3.2005, it became non-excisable. The relevant portion of the said decision is reproduced below:- "4. The appellant manufactures Sugar and Molasses. From the molasses, Rectified spirit is produced. Rectified spirit Is denatured and de-natured spirit is also manufactured. The appellant takes Cenvat credit on the molasses used in the manufacture of Rectified Spirit/Denatured Spirit. It is the contention of the Revenue that w.e.f. 1-3-2005, Rectified Spirit has become non-excisable and, therefore, no Cenvat credit could have been availed by the appellant. Apart from molasses, furnace oll is also used in the manufacture of Rectified Spirit as a fuel. Therefore, Revenue is also aggrieved that the Cenvat credit avalled on furnace oll is also not admissible. The appellant has contended that prior to 1-3- 2005, Rectified Spirit was covered under Chapter sub-heading 2204.90 and Denatured Spirit was covered under CSH 2204.10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was reported as wastage/storage loss should be reversed as per provisions of Rule 6(3) of the CENVAT Credit Rules, 2004. In the case of Godavari Sugar Mills Ltd. Vs. CCE 2007 (212) ELT 234 it was held that molasses used for manufacture of Rectified spirit and denatured spirit, part of Rectified spirit converted into denatured spirit which is dutiable, benefit of Notification No. 67/95-CE is available provided the manufacturer discharges the obligation prescribed under Rule 6 of the CENVAT Credit Rules. In that case, it was observed that the Rectified spirit covers under Heading No. 22.04 of the Tariff (presently 2207 2000). 8.8 The adjudicating authority observed that Section 2(d) of the Central Excise Act, 1944 defines excisable goods to refer only to those goods being leviable to central excise duty, denatured ethyl alcohol virtually changed into non-excisable goods since 1.3.2005. It has been observed that Note 4 of Chapter22 of the Tariff excludes liquor for human consumption. Rectified spirit and other varieties of denatured ethyl alcohol being only undiluted form of liquor for human consumption and usable for potable purposes are certainly excluded from the purview of C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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