EID Parry (India) Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that input credit of duty paid on molasses used in production of rectified spirit being a final product is eligible as CENVAT Credit.
Facts- The appellant is engaged in the manufacture of Denatured Ethyl Alcohol falling under Chapter Heading 2207 20 00 of the Central Excise Tariff Act, 1985 and Rectified Spirit, Extra Natural Alcohol, Anhydrous Alcohol, Impure Spirit, etc. using molasses procured from their sister units in Pudukottai, Nellikuppam and Pugalur. The appellant availed cenvat credit of the duty paid on molasses procured from the sister units.
During scrutiny of the records and returns filed by the appellant it was noticed that the appellant had paid appropriate duty on the Denatured Ethyl Alcohol falling under Chapter Heading 2207 20 00. However, the Rectified Spirit which is cleared by them being not dutiable, they had paid an amount equal to 6% of the value of Rectified Spirit under Rule 6 (3) (i) of Cenvat Credit Rules, 2004. With effect from 01.03.2005, the Rectified Spirit was omitted from Heading 2207 of the Schedule to the CETA, 1985. It therefore appeared to the department that Rectified Spirit is not excisable goods and does not fall under the term ‘final product’. The availment of input credit of the duty paid on molasses used in the production of Rectified Spirit (not being a final product) appeared to be therefore incorrect.
Consequently, the show cause notice dated 19.07.2013 was issued proposing to deny the credit availed on molasses used in the manufacture of Rectified Spirit and also to recover the same along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand along with interest and imposed penalty. Aggrieved by the said order, appellant is now before the Tribunal.
Conclusion- The very same issue was considered in the appellant’s own case along with the cases of Rajashree Sugars and Chemicals Ltd., Dharani Sugars & Chemicals Ltd., Shree Ambika Sugars Ltd. The Tribunal vide Final Order No.40789-40799/2014 dt. 20.11.2014 reported in 2016 (343) ELT 462 (Tri.-Chennai) held that the denial of Exemption Notification No.67/95-CE on molasses captively consumed to manufacture Rectified Spirit and Extra Neutral Alcohol (ENA) cannot be justified. Accordingly, denial of credit on molasses was also set aside.
We are of the view that the impugned order cannot sustain and requires to be set aside which we hereby do.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the appellant is engaged in the manufacture of Denatured Ethyl Alcohol falling under Chapter Heading 2207 20 00 of the Central Excise Tariff Act, 1985 and Rectified Spirit, Extra Natural Alcohol, Anthydrous Alcohol, Impure Spirit etc. using molasses procured from their sister units in Pudukottai, Nellikuppam and Pugalur. The appellant availed cenvat credit of the duty paid on molasses procured from the sister units. During scrutiny of the records and returns filed by the appellant it was noticed that the appellant had paid appropriate duty on the Denatured Ethyl Alcohol falling under Chapter Heading 2207 20 00. However, the Rectified Spirit which is cleared by them being not dutiable, they had paid an amount equal to 6% of the value of Rectified Spirit under Rule 6 (3) (i) of Cenvat Credit Rules, 2004. With effect from 01.03.2005, the Rectified Spirit was omitted from Heading 2207 of the Schedule to the CETA, 1985. It therefore appeared to the department that Rectified Spirit is not excisable goods and does not fall under the term ‘final product’. The availment of input credit of the duty paid on molasses used in the production of Rectified Spirit (not being a final product) appeared to be therefore incorrect. Consequently, the show cause notice dated 19.07.2013 was issued proposing to deny the credit availed on molasses used in the manufacture of Rectified Spirit and also to recover the same along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand along with interest and imposed penalty. Aggrieved by the said order, appellant is now before the Tribunal.
2.1 Ld. Counsel Sri S. Muthuvenkatraman appeared and argued for the appellant. It is submitted that the Department has taken the view that rectified spirit not being excisable goods, and not covered by the term “Final product”, availment of input Cenvat credit of duty paid in respect of molasses used in the production of such rectified spirit is not eligible. The SCN has been issued on this basis.
2.2 The Ld. Counsel submitted that the appellant had sent their reply dated 21.11.2013 to the above show cause notice, submitting, inter alia, the following:
