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TMI Blog2024 (8) TMI 1447X X X X Extracts X X X X X X X X Extracts X X X X ..... ELGAUM [ 2006 (11) TMI 497 - CESTAT, BANGALORE ] has held ' 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 Notification No.67/95-CE dated 1.3.1995.' The impugned order is set aside and the appeal is allowed. - HON'BLE DR. D. M. MISRA , MEMBER ( JUDICIAL ) And HON'BLE MRS. R BHAGYA DEVI , MEMBER ( TECHNICAL ) Mr. J. Shankararaman , Advocate , for the Appellant Mr. H. Jayathirtha , Superintendent ( AR ) , for the Respondent ORDER PER : D. M. MISRA This appeal is filed against Order-in-Appeal No.183/2011 dated 23.12.2011 passed by the Commissioner of Central Excise (Appeals), Mangalore. 2. Briefly stated the facts of the case are that the appellants are registered with Central Excise for manufacture of sugar, molasses, ethyl alcohol, fusel oil and denatured spirit falling under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the condition that the appellant reverses the input credit attributable to inputs used in the manufacture of molasses 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eads as follows: Rule 6. Obligation of a manufacturer or producer of final products and a provider of output services - (1) . (2) . (3) Notwithstanding anything contained in sub-rules (1) and (2), the manufacturer or provider of output service, opting not to maintain separate accounts, shall follow either of the following conditions, as applicable to him, namely: (a) if the exempted goods are - (i) goods falling within Heading No.22.04 of the First Schedule to the Excise Tariff Act (hereinafter in this rule referred to as the said First Schedule) (ii) . (iii) . (iv) . (v) . (vi) . (vii) the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to inputs and input services used in, or in relation to, the manufacture of such final products at the time of their clearance from the factory; 10. The said condition has been interpreted by the Tribunal in Godavari Sugar Mills Ltd. (supra) case, it has been observed that: 7.1 In respect 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 Denatur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit Rules, 2002? The obligation under Rule 6 of Cenvat Credit Rules is that when a manufacturer uses input both for exempted and dutiable final products, he should maintain separate accounts because no Cenvat credit is available for the inputs used in exempted products. There is an option for the manufacturer not to maintain two separate accounts. Once he exercises the option, it is sufficient if he pays 10% of the sale price of the exempted products. But certain goods have been specified in respect of which the obligation would be to reverse the credit attributable to the inputs used in the manufacture of exempted final products. In the present case, Rule 6(3)(a)(i) specifically refers to goods falling under 22.04 of the First Schedule (presently 22 07 20). In other words, where the final product is ethyl alcohol and other spirits denature of any strength, it is sufficient if the Cenvat credit attributable to inputs in the exempted product is reversed 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 cap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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