Case Law Details
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:
- The appellant has been complying with the procedures prescribed under Rule 6(3) (i) of Cenvat Credit Rules i.e., payment of 6% of value of Rectified Spirit. The above was duly intimated to the department annually.
- The notice does not dispute the fact that rectified spirit is a manufactured product and excise duty is leviable on excisable goods manufactured in India under sec 3 of the Central Excise Act 1944.
- Chapter Note 4 of Chapter 22 excludes alcoholic liquors for human consumption from the scope of the said chapter. In order to exclude rectified spirit from the scope of the chapter, it must be proved that the same is alcoholic liquor for human consumption in the condition in which it is cleared.
- It has been held by the Supreme Court in the case of Synthetics and Chemicals Ltd vs. State of U.P and others reported in AIR 1990 SC 1927 in para 73 that rectified spirit is not alcohol fit for human consumption. The rectified spirit cleared by them to distilleries is of 95% alcoholic strength and is therefore not fit for human consumption, as per the order of the Supreme Court. In this regard, the Ld. Counsel relied on the following case laws:
- Dharamsi Morarji Chemical Co Ltd vs Collector – 1996 (86) ELT 538
- Tata Engineering and Locomotive Co Ltd vs UOI – 1993 (64) ELT 171
- As per Rule 4 of Interpretative Rules, undenatured ethyl alcohol (rectified spirit) having strength 80% of volume can be said to be akin to denatured ethyl alcohol and hence classifiable under Tariff heading 2207 20 00 only, but gets exempted under notification 3/2005-CE. Even HSN specifies both types of ethyl alcohol under 2207.
- Even the Notification No. 3/2005-CE (now superseded by notification 12/2012 CE dated 17.03.2012) issued under Section 5A has prescribed Nil rate of duty against undenatured ethyl alcohol’ under Tariff heading 2207 20 00 with description All spirits (other than denatured ethyl alcohol of any strength). Once an exemption is given to a product, the product is otherwise implied to be excisable.
- The issue whether ‘Rectified spirit” is non-excisable or not after restructuring of Tariff w.e.f 01.03.2005 was a matter of dispute before the Tribunal in the following cases, wherein, it was held that both rectified spirit and denatured spirit are covered under same heading 2207 20 00
- Ugar Sugar Works vs CCE, Belga um – 2008 (232) ELT 81 (T)
- Ugar Sugar Works Ltd vs CCE, 2007 (214) ELT 334(T)
- Shri Hiranyakeshi Sahakari Sakkare Karkhana Niyamit Vs CCE – Final Order No. 459/2007 dt. 18.4.2007 – 2008 (232) ELT 81
- Sakthi Sugars Ltd vs CCE (2008) 230 ELT 676
- Thiru Arooran Sugars Ltd vs CCE – (2009) TIOL 372
- Since Rectified Spirit was excisable but exempt under a notification, appellants had reversed 6% value of exempted goods viz Rs.5,89,89,475/- and complied with the obligation under Rule 6 of Cenvat Credit Rules 2004.
- For the above reasons, Rectified Spirit can be considered as Final Product for the purpose of central excise and consequently, appellant is eligible for input credit on the molasses used in its production subject to compliance of Cenvat Credit Rule 6.
- The appellant was filing annual intimation informing the department about their intention to reverse 5% / 6% of the value of Rectified Spirit, under Rule 6(3) (i) of the Cenvat Credit Rules 20204 and they were showing the amount so reversed in the monthly ERI Returns and hence there was no suppression of facts on their part. Thus, it was clear that facts were known to the department much earlier to the institution of present proceedings.
2.3 The Ld. Counsel submitted that merely because Rectified Spirit falling under the category Ethyl Alcohol of an Alcoholic strength by volume of 80% vol. or higher’ is not specifically mentioned in Heading 2207, it would not mean that it has become non-excisable. It is argued that by virtue of interpretative rule 4, it would be covered under Heading 2207 for the following reasons:
a. ‘Rectified Spirit’ as per Concise Science Dictionary is a constant-boiling mixture of ethanol (95.6) and water. It has a concentration of around 95% Ethyl Alcohol and about 5% water. Being 95% concentration of Ethyl Alcohol, it is highly toxic and cannot be consumed by human beings. In other words, being not fit for human consumption it is not excluded from Chapter 22 of the tariff (vide chapter note 4 to the chapter).
b. Though Rectified Spirit is not specifically mentioned in Chapter 22, by virtue of Chapter Note 4 to this chapter since it is not for human consumption and since it is not covered in my other chapter, chapter 22 is the only chapter in which it can be classified. In HSN, under Rule 4 the explanatory note states as follows:
i. This Rule relates to goods which cannot be classified in accordance with Rules 1 to 3. It provides that such goods shall be classified under the Heading appropriate to the goods to which they are most akin.
ii. In classifying in accordance with Rule 4, it is necessary to compare the presented goods with similar goods in order to determine the goods to which the presented goods are most the presented goods are classified in the same heading as the similar goods to which they are most akin.
iii. Kinship can, of course, depend on many factors, such as description, character purpose. Taking into account the above explanatory note in HSN, the appellants would now refer to the description of Heading 2207 as contained in HSN. “Undenatured Ethyl Alcohol of an Alcoholic strength by Volume of 80% vol. or Higher, Ethyl Alcohol, and other spirits. Denatured, of any strength’.
vi. Undenatured Ethyl Alcohol of an alcoholic strength of 80% and above cannot be used for human consumption. Similarly, Ethyl Alcohol, denatured also cannot be used for human consumption. Thus, the character and purpose of both types of spirits is the same. Rectified spirit is undenatured ethyl alcohol of about 95% alcoholic strength (more than 85%). Thus, by virtue of same character and purpose viz being not suitable for human consumption, in terms of above interpretative Rule 4 of Rules for classification, Rectified Spirit though not specifically mentioned in the tariff and though not excluded from the scope of chapter 22 is classifiable under Heading 2207 only.
2.4 It is submitted that the above classification of Rectified spirit is confirmed by Tribunal’s decisions referred above.
3. The Ld. Counsel submitted that therefore, the reasoning adopted by the Commissioner to hold that the rectified spirit is not excisable by virtue of the introduction of 8-digit tariff cannot be sustained. It is also submitted that when the new 8-digit central excise tariff was introduced in 2005, Government issued a circular No.808/5/2005-cx. dated 25.2.05 wherein in the context of notification no.03/2005-CE dated 24.2.05 it was clarified that the notification as issued to preserve the existing duty rates on specified commodities where effective rates were built into six-digit tariff but are now subject to different tariff rates in the 8-digit code. Thus, it is clear that the change into 8-digit code did not bring about any change in excisability of a product as it stood prior to the change.
4. The decisions of Tribunal in Ugar Sugar Works Ltd vs. Commissioner 2007 (214) ELT 337 was relied upon by the Ld. Counsel. This decision of Tribunal was relied upon in subsequent decision of the same appellant as reported in 2008 (232) ELT 81. The Tribunal in the above decisions did not accept the department’s stand that Rectified Spirit has become non-excisable from 01.03.2005. Tribunal also relied upon the earlier decisions in NCS Distilleries / Estates P. Ltd vs. CCE, Vizag 2007 (207) ELT 400 and Final Order No.56 to 59/2007 dated 11.2006 in the case of Godavari Sugar Mills Ltd and others vs. CCE and held that once the credit attributable to molasses used in manufacture of Rectified Spirit is reversed, no further liability would arise.
5. Once the above decisions have been rendered taking into consideration the so called changes effected in the tariff, from 03.2005, the Commissioner in the instant case, ought not to have confirmed the demand.
6. As regards the availment of credit the Commissioner has failed to understand that the appellants have discharged their obligation under Rule 6 of the Cenvat credit rules and therefore the question of alleging that Cenvat credit has wrongly been availed is not justified.
7. As regards invoking the extended period of time limit, it is settled law that once the department is aware of the facts and once on similar question, a notice had been served for the earlier period larger time limit cannot be extended and penalty cannot be imposed. In the instant case, the show cause notice was issued on 19.07.2013 for the period between April 2010 and September 2012 which clearly indicates that for major period, the demand is beyond the normal period. The Ld. Counsel pointed out that the Commissioner failed to understand how in the facts of the case, while for the earlier period of the Appellant’s own Group Companies, the Commissioner (Appeals) had allowed the appeal on the same issue and the demand invoking extended period could be confirmed. Ld. Counsel prayed that appeal may be allowed.
8. Ld. A.R Sri M. Ambe appeared and argued for the Department. It is submitted that Note 4 to Chapter 22 of the Central Excise Tariff Act, 1985, excludes ‘Alcoholic liquors for human consumption’ from the scope of the Chapter and hence, the appellant has raised the contention that any alcohol that is not fit for human consumption should automatically find a place within it. It is submitted by Ld. A.R that the original authority has considered this argument in para-8 of the impugned order. Chapter Note 4 solely defines the scope of exclusions from the Chapter. After the introduction of 8 digit sub headings w.e.f. 1.3.2005 ‘Rectified Spirit’ does not come under the category of excisable goods. Further rectified spirit is the primary raw material for the production of alcoholic beverages for human consumption. Denaturing of ethyl alcohol is an irreversible process of adding methanol or some other poisonous substance to make it unfit for human consumption. Rectified spirit, on the other hand, is unfit for human consumption because of its high concentration which can be used for both beverages as well as for industrial application. Therefore, while ‘Rectified Spirit’ is capable of being made fit for human consumption, denatured Alcohol is not. Therefore, the legislature in adopting revised central tariff heading have deliberately excluded even such products that have the potential to be used for human consumption. This exclusion dos not in any way conflict with the spirit of Chapter Note 4 of Chapter 22.
9. In regard to the argument put forward by the Ld. Counsel as to the exemption notification no.03/2005-CE dated 24.2.05, it is submitted by the Ld. A.R that the said sub heading 22072000 covers ‘Ethyl alcohol and other spirits, denatured, of any strength”. This sub headings thus covers ‘other spirits’ apart from Ethyl Alcohol. Therefore, the term ‘all spirits’ with the exclusion of ‘Denaured Ethyl Alcohol’, in the notification refers to these ‘other spirits’ in the subheading. Even if it is accepted that the term ‘all spirits’ would include ‘rectified spirit’, such spirit requires to be classified under sub heading 2207 20 00 . Thus it is beyond doubt that ‘Rectified Spirit’ fails to qualify on that count also. The decisions relied by the counsel for the appellants are not applicable to the facts of the case. Contravention of the provisions of law would not have come to light but for the verification conducted by the department. SCN issued invoking extended period is therefore legal and proper.
10. Heard both sides.
11. The issue to be decided in this appeal is whether rectified spirit arising in the course of manufacture of sugar can be considered as excisable goods and whether input credit on molasses used in the manufacture can be availed under Cenvat credit rules? and whether in the facts and circumstances of the case invoking of the extended period of time limit will be in order and consequently whether the imposition of penalty is justified?
14. 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. The said decision was upheld by the Apex Court as reported in 2022 (379) ELT 556 (SC). Relevant part of the said final order of the Tribunal is noteworthy and reproduced as under :
“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.
1. I am directed to draw your attention to this Department’s Notification No.6/2005-C.E. (N.T.), 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 classification code in it’s new 1st & 2nd Schedules) from 28-2- 2005. Trade should also be suitably informed immediately and guided in the matter so that the transition from 6-digit to 8-digit classification code is smooth without any difficulty to the trade in day-to-day clearances.
3. Notification No. 3/2005-C.E., dated 24th February 2005 has been issued to preserve the existing duty rates on specified commodities where effective rates were built into the six-digit tariff, but are now subject to different tariff rates in the 8-digit code. This is subject to any subsequent changes.”
8.4 In the present case, there is no dispute that prior to 28-2-2005, Rectified Spirit and ENA 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.03/2005-CE dated 24.2.05 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 no.03/2005-CE dated 24.2.05 (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.03/2005-CE dated 24.2.05 The Hon’ble Allahabad High Court in the case of Gularia Chini Mills v. Union of India – 2014 (34) S.T.R. 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-Central Excise (N.T.) was published in Part II, Section 3, sub-section (I) of the Gazette of India, Extraordinary, dated 24-2-2005, which reads as under :
“In exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules to amend all the rules made under the said section and all the notifications issued under the said rules and for the time being in force on the date of commencement of the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005), 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.I (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 numbering scheme for Central Excise classification through the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005). These amendments do not involve any substantive changes in the existing rules, so the particulars of each rule have not been indicated.”
Furthermore, during debate in Lok Sabha on the said Central Excise Tariff (Amendment) Bill, 2004, the then Hon’ble Minister of Finance in regard to the purpose of introduction of eight digit classification has stated that “the purpose of the Bill is very limited. On the custom side, we already have an eight-digit classification. It is, therefore, necessary that on the Excise side also we 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 Central Excise Tariff Act. Since Column of rate of duty is blank, therefore, in view of Section 2 of the Central Excise Tariff Act, 1985, electrical energy is not being subjected to excise duty for the purposes of being excisable goods under Section 2(d) of the Central Excise Act. Furthermore, Rule 6 of the 2004 Rules, which is applicable only to excisable goods, can alone be treated as exempted goods for the purposes of Rule 6(3) of 2004 Rules, does not apply to electrical ”
… …. ….
8.9 The learned AR for Revenue relied upon the decision of the Hon’ble Bombay High Court in the case of Nip had Sakhar Karkhana Ltd. v. CCE – 2014 (300) E.L.T. 66 (Bom.). In that case, the assessee filed appeal along with stay application before the Tribunal. By stay order, the Tribunal directed the assessee to pre-deposit a sum of Rs. One crore out of Rs. 1.14 crores in accordance with the provisions of Section 35F of the Central Excise Act, 1944. The Hon’ble High Court directed the Tribunal to decide the stay application afresh considering the decisions to take prima facie view whether they are applicable to the facts of the impugned case before directing pre-deposit. The learned AR also relied upon the decision of the Tribunal in the Ugar Sugar Works Ltd. (supra), which we have already discussed above. In the case of Kothari Sugars & Chemicals Ltd. v. CCE – 2010 (262) E.L.T. 545, the Tribunal remanded the matter. In the case of Venkateshwara Winery & Distillery Ltd.v. CCE – 2013 (295) E.L.T. 306, the Tribunal granted stay. In our considered view, none of the case laws relied upon by the learned AR are applicable in the facts and law of the case.
8.10 The learned AR referred Rule 48 of Tamilnadu Distillery Rules, 1985, Govt. of Tamilnadu, to establish that Rectified spirit is fit for human consumption. We find that the adjudicating authority accepted prior to 1-3-2005 Rectified Spirit covers under subheading No. 22.04 which is not fit for consumption and we are unable to accept the submission of the learned AR. It is noted that as regards Entry 84, List I, Seventh Schedule to the Constitution and other entries relating to alcohol it was only after the decision of the Hon’ble Supreme Court in the case of Synthetics and Chemicals [1990 (1) SCC 109] on 25-10-1989 holding that industrial alcohol was outside the legislative competence of State Legislature, the constitutional position relating to excisability for purposes of Central Excise became clear. Tamilnadu Prohibition and Excise Manual, Govt. of Tamil Nadu stated that levy of Excise Duty and Vend Fee on Industrial Alcohol has been withdrawn by the Government by order No. MS No. 167 Home, Prohibition and Excise (III) Department dated 3rd February 1990 effective 25-10-1989, the date of order of Supreme Court in W.P. No. 18, etc., of 1980 holding that the State Government could not invoke Entry 8 – List II, to levy Excise Duty and Vend Fee and the powers of State Government under “Entry 8-List II is limited to regulating and the prevention of conversion of alcoholic liquors for industrial use to one for human consumption and hence presently no levy is in operation. The Government, consequent on the withdrawal on Excise Duty and Vend Fee, have by order, MS. No. 662 Home, Prohibition and Excise III Department dated 4-9-1992 prescribed the collection of an Administrative Service Fee of Rs. 0.50 paise per bulk litre of spirit produced in the distillery before the spirit in issued from the distillery, to cover the service charges including expenditure on staff. The statements as referred by the learned AR are in this context.
8.11 The learned AR submits that the Table of the Notification No. 67/95-C.E. referred the Cenvat Credit Rules, 2001 and not Rules, 2004. In this case, we find that the adjudicating authority accepted that prior to 1-3-2005, the appellants are eligible for the benefit of exemption Notification No. 67/95 and therefore, the submission of the learned AR for the Revenue has no merit. Apart from that, the Hon’ble Supreme Court in the case of Vikram Cement Ltd. – 2006 (194) E.L.T. 3 (S.C.) held that the schemes of Modvat and Cenvat credit are not different.
8.12 It is seen from the above, that after re-structuring of Central Excise Tariff from 6 Digit to 8 Digit with effect from 1-3-2005, Rectified Spirit and ENA are exempted by notification no.03/2005-CE dated 24.2.05 (supra) and the appellant discharged the obligations under Rule 6 of the Cenvat Credit Rules, 2004 in respect of clearance of Rectified Spirit and ENA and therefore, denial of exemption Notification No. 67/95-C.E. (supra) on Molasses captively consumed in Rectified Spirit and ENA cannot be sustained. Accordingly, denial of Cenvat credit on the Molasses purchased from other sugar mill used in the manufacture of Rectified Spirit and ENA are also liable to be set aside. We have also noted that inputs and input service are not exclusively used for generation of electricity and therefore, Cenvat credit cannot be denied.”
15. After appreciating the facts and following the above decision, we are of the view that the impugned order cannot sustain and requires to be set aside which we hereby do. In the result, the appeal is allowed with consequential relief, if any.
(pronounced in court on 26.07.2023)
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