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2016 (11) TMI 994 - AT - Central ExciseCENVAT credit - molasses - Denatured spirit - utilization of credit taken on the input under CENVAT Credit Rules, 2004 and the non-compliance with the conditions governing the Rules when exempted goods are manufactured using duty paid inputs on which credit has been taken - whether denial of credit of duty paid on molasses during this period and to seek recovery of credit utilized for clearance of denatured rectified spirit justified? - Held that: - The molasses was eligible for exemption from duty upon being captively consumed for manufacture of de-natured spirits under N/N. 67/95-CE dated 16th March 1995. No separate accounts were being maintained even though the molasses was also used to manufacture and clear rectified spirit which is non-excisable - reliance placed on the decision of the case Godavary Sugar Mills Ltd and Others v Commissioner of Central Excise [2006 (11) TMI 497 - CESTAT, BANGALORE] where it was held that 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 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 - There is an option for the manufacturer not to maintain two separate accounts. The denatured alcohol is acknowledged as an excisable good and 'output' in terms of CENVAT Credit Rules, 2004. There cannot be discriminatory treatment in the treatment accorded to two manufacturers of the same product merely on the ground that one uses captively produced molasses and the other procures from external sources - rectified spirit is an exempt goods and as the appellants do manufacture dutiable goods also, CENVAT Credit Rules does permit them to take credit of duty paid on molasses subject to compliance with Rule 6 of CENVAT Credit Rules, 2004. There is no finding that they have not reversed the CENVAT Credit taken on inputs that have gone into the exempt goods. This is sufficient compliance of Rule 6. They are, consequently, not required to be subject to recovery of duty on goods cleared by utilization of CENVAT Credit and not required to make good the credit taken on inputs. Appeal allowed.
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