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TMI Blog2024 (8) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the Condition (vi) of the N/N. 67/1995-CE dated 16.3.1995. Therefore, molasses even if used in the manufacture of exempted products viz., Rectified Spirit and Extra Neutral Alcohol still eligible to avail exemption. In the present case, the appellant had reversed proportionate credit attributable to manufacture of molasses which cannot make them eligible to claim exemption N/N. 67/95-CE on molasses used in the manufacture of exempted goods, which is the second stage of manufacture of Ethyl Alcohol and denatured spirit. Thus, the credit attributable to the inputs i.e., molasses used in the manufacture of exempted goods is to be statutorily reversed. This Tribunal analysing the relevant provisions of Rule 6 of CCR, 2004 has taken a view that credit on inputs availed and used in the manufacture of molasses, an input and intermediate by-product, which in turn is used in the manufacture of exempted final products viz., Ethyl Alcohol and denatured spirit, therefore, inputs attributable to the manufacture of molasses, on its reversal, is a sufficient compliance of Rule 6 of CCR, 2004; hence, eligible to the benefit of N/N. 67/95-CE dated 1.3.1995. The impugned order is set aside - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar in their factory, molasses emerges as an inevitable by- product, which is cleared to their own distillery unit situated in the factory premises for further fermentation and distillation process, during which dutiable products like fuse oil, denatured ethyl alcohol carbon dioxide and exempted products like Ethyl Alcohol (Extra Neutral Alcohol)/Rectified Spirit emerges. Ethyl Alcohol is classified under chapter heading 2207 20 00 and is exempted by Notification No.3/2005-CE dated 24.02.2005. He submits that it is an excisable product as held by the Tribunal in the case of Manakpur Chini Mills Ltd. V. CCE: 2017 (6) GSTL 188 (T), followed in Bannari Amman Sugars Ltd. vs. Commissioner of Customs, C. Ex. ST. Mysore: 2018 (362) ELT 705 (Tri.-Bang). Further, they have submitted that in terms of Clause (vi) of the Notification No.67/1995-CE 16.03.1995, the appellant had discharged the obligation under Rule 6 of the CCR, 2004, by reversing / paying an amount equivalent to the CENVAT credit attributable to the inputs and input services used in or in relation to the manufacture of molasses. Hence, they are eligible to the benefit of said Notification. In support, they have referred to the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge as a by-product. The said molasses are used in the manufacture of both dutiable as well as exempted product. The exemption under the said Notification No.67/95-CE is available to intermediary products used in or in relation to the manufacture of final product, however, the proviso to the said Notification stipulates that exemptions shall not be applicable when used in or in relation to the manufacture of final products which are exempt from duty of excise or chargeable to Nil rate of duty subject to the exceptions mentioned in clauses (i) to (vi) appended to the said Notification. In terms of Clause (vi), the exemption under the Notification would be available to the intermediate product i.e., molasses in the present case, used in or in relation to the manufacture of dutiable and exempted final product after discharging obligation prescribed under Rule 6 of CCR, 2004. Rule 6(3) provides option to the manufacturer or provider of output service, who does not maintain separate accounts to follow either of conditions (a), (b) or (c) stipulated therein, as applicable. As per condition (a), if the exempted goods are falling under Heading 22.04, the manufacturer shall pay an amount equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which in turn was used in the manufacture of Rectified Spirit/Neutral Alcohol. It is clear that they had reversed the credit attributable to inputs used in the manufacture of molasses and not the credit attributable to inputs used in the manufacture of exempted final product. Further, he has submitted that any interpretation and/or judgment contrary to the statutory provisions be considered as per incuriam and not a binding precedent. 4.2 Referring to Rule 6 of CCR, the learned AR has submitted that the appellant reversed the proportionate CENVAT credit attributable to the inputs used in the manufacture of molasses which is the first stage in the manufacture of sugar and molasses; and in the second stage of manufacturing wherein ethyl alcohol and denatured spirit is manufactured, molasses becomes the main input and as per Rule 6(3)(a)(i), proportionate credit involved in the inputs and input services that are further used in the manufacture of exempted final products are required to be reversed, which would be sufficient compliance for availment of exemption under Notification No.67/95-CE dated 16.3.1995. The appellant is claiming exemption on molasses, thus, the inputs involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TION NO.67/1995-Central Excise, Dated, March 16, 1995 In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts (i) capital goods as defined in CENVAT Credit Rules, 2002 manufactured in a factory and used within the factory of production; (ii) goods specified in column (2) 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 manufacture of final products specified in column (3) of the said Table; from the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) : Provided that nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of final products which are exempt from the whole of duty of excise leviable thereon or are chargeable to Nil rate of duty, other than those goods which are cleared,- (i) to a unit in Free Trade Zone, or (ii) to a Hundred Percent Export Oriented Undertaking, or (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Godavari Sugars Ltd., the appellants pay Central Excise duty on the molasses cleared to their Distillery Unit avail the credit on the same for manufacture of Rectified Spirit. A part of Rectified Spirit is converted to Denatured Spirit. The contention of the department is that the appellants cannot take credit of the duty paid on molasses because the final product Rectified Spirit is not liable to pay Central Excise. On this ground, the Modvat credit has been denied. In respect of M/s. Renuka Sugars Ltd., the appellants have cleared the molasses without payment of duty availing exemption under Notification 67/95. In the case of M/s. GMR Industries, the benefit of notification for captively consumed molasses has been availed. However, in all the cases the appellants have reversed the Cenvat credit attributable to exempted product. 7.2 It is the contention of the appellants that the reversal satisfies the conditions of Notification 67/95 read with Rule 6 of Cenvat Credit Rules, 2002. Notification 67/95 grants exemption from payment of duty on an intermediary product which is captively consumed for manufacture of excisable goods. Molasses is an excisable product. When molasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed or paid. This obligation from the records of the case appears to have been discharged in respect of all the appellants. Therefore, the appellants are entitled to the benefit of Notification No. 67/95 in respect of molasses used captively for manufacture of Rectified Spirit and Denatured Spirit. Therefore, the demand of duty in respect of the credit taken on molasses is not correct. 11. The said judgment has been later followed by the Tribunal in the case of Shri Chamundeswari Sugar Mills Ltd. vs. CCE vide Final Order No.964/2007 dated 21.08.2007. Also recently, this Tribunal in appellant s own case vide Final Order No.20879-20886/2023 dated 25.08.2023 had followed the ratio laid down in the above case. 12. The learned Authorised Representative for the Revenue has vehemently argued that the appellant has not correctly complied with the condition laid down in Rule 6(3)(a)(i) of the CCR, 2004, in as much as, the appellant are required to discharge duty on the intermediate product, in the event, the same is used in the manufacture of final product which are exempted or to comply the provisions of Rule 6 of CCR, 2004. In the present case, the appellant had reversed proportionate cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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