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TMI Blog2010 (6) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... ivision. In the Sugar Division, sugar was manufactured and cleared on payment of duty. Molasses, a by-product, was removed from the Sugar Division, on payment of duty, to the Distillery Division where it was used in the manufacture of rectified spirit (exempted final product), denatured spirit (dutiable product) and ENA (dutiable product). Separate MODVAT accounts were maintained in the two divisions. In each division, there was no separate maintenance of inventory/account of common inputs used in the manufacture of exempted and dutiable final products. The assessee was therefore paying 8% of the sale proceeds (excluding taxes) of the rectified spirit (exempted final product) as required under Rule 57CC of the Central Excise Rules, 1944. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring both sides, we note that the Revenue's case is principally founded on Circular No. 615/6/2002-C.X., dated 4-2-2002, wherein it was clarified, in respect of a manufacturer running both Sugar Unit and Distillery Unit, as follows :- " Where sugar unit and distillery unit are two distinct entities, molasses is produced in sugar unit and cleared on payment of duty. No question of availing credit of duty paid on molasses arises in such case. However, if molasses so produced is used as input in distillery unit which is altogether a separate entity, credit of duty paid on such molasses can be utilized by the latter entity." 3. The learned JDR has argued that the assessee was not entitled to utilize any credit on molasses from the MODVAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permitted the assessee to utilize the credit on molasses (input for Distillery Division) towards payment of duty on sugar (final product of the Sugar Division) on or after 1-3-1997. The credit availed in December 1998 is, therefore, admissible to the assessee. In relation to the credit on molasses utilized in October 2001, the learned Counsel has referred to sub-rule (1B) of Rule 57AB of the Central Excise Rules, 1944. This sub-rule reads as under :- "The CENVAT credit may be utilized for payment of any duty of excise on any final products manufactured by the manufacturer or for payment of duty on inputs or capital goods themselves if such inputs are removed as such or after being partially processed, or such capital goods are removed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 57A and the Notifications issued thereunder), which would imply that the rule-making authority intended to relax certain conditions for utilisation of credit taken on input. Accordingly, a manufacturer of final product was allowed to utilize the credit of duty paid on any input towards payment of duty on a final product even if such input was not actually used in the manufacture of such final product. The proviso, however, insisted on the input having to be received and used in the factory of production on or after the first day of March, 1997. It appears that the proviso to Rule 57F(12) enabled the assessee to utilize the credit of duty paid on molasses, towards payment of duty on sugar. The existence of the sugar and distillery divis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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