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TMI Blog2015 (3) TMI 954X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax paid on various input services used in or in relation to manufacture of their final product as per the provision of Cenvat Credit Rules. Some of the input services in respect of which Cenvat credit was being taken by them during the period of dispute are security agency service, goods transport agency service for transportation of the inputs up to the factory premises, manpower recruitment or supply service, internet telecom services, courier service, business auxiliary service (commission agents service) etc. The molasses manufactured by the appellant was partly cleared on payment of duty to various customers and remaining quantity was being cleared captively for use in their distillery unit for manufacture of rectified spirit/extra neutral alcohol and from rectified spirit, the denatured spirit/special denatured spirit. The distillery unit of the sugar mill, beside the in-house production of molasses, was also receiving duty paid molasses from other suppliers in respect of which Cenvat credit was being taken. The in-house production of molasses was being cleared captively to distillery unit at nil rate of duty by availing duty exemption under Notification No. 67/95-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rectified spirit/extra neutral alcohol there is no question of any further reversal of the Cenvat credit and there is no question of denial of the benefit of Notification No. 67/95-CE in respect of the quantity of molasses used for manufacture of denatured spirit/ special denatured spirit as well as un-denatured rectified spirit. 1.2 The matter was adjudicated by the Commissioner, Central Excise, Delhi LTU, vide order-in-original No. 51-53/Commr/13 dated 09/09/13 by which the Commissioner (a) confirmed the duty demand of Rs. 6,35,38,125/- in respect of clearances of molasses for captive consumption alongwith interest thereon under Section 11AB/11AA of Central Excise Act, 1944 ; (b) confirmed the demand of Rs. 48,48,388/- under Rule 6 (3a) (i) of the Cenvat Credit Rules, 2004 alongwith interest thereon under Section 11AB and (c) confirmed the Cenvat credit demand of Rs. 5,34,03,535/- in respect of molasses used in the manufacture of non-excisable goods, under Rule 14 of the Cenvat Credit Rules, 2004 readwith Section 11A of Central Excise Act, 1944 alongwith interest thereon under Section 11AA of Central Excise Act, 1944. 1.3 The Commissioner appropriated an amount of Rs. 75,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... natured spirit and un-denatured rectified spirit (ENA) cannot be denied, that the denial of Cenvat credit of Rs. 5,34,03,535/- in respect of molasses used in the manufacture of rectified spirit/extra neutral alcohol is without any basis, as the appellant were reversing the proportionate credit availed in respect of molasses to the extent the same was being used in the manufacture of rectified spirit/extra neutral alcohol, that the demand of Rs. 48,48,388/- in respect of clearances of electricity, press mud and bagasse is also not sustainable, as there was no failure on the part of the appellant in complying with the provisions of Rule 6 (3) (ii) readwith Rule 6 (3A) of the Cenvat Credit Rules, 2004, that even if the rectified spirit/extra neutral alcohol (ENA) are treated as non-excisable goods, the benefit of duty exemption under Notification No. 67/95-CE in respect of the molasses cleared for captive use in the distillery unit cannot be denied in view of the Tribunal judgment in the case of Kothari Sugar and Chemical Ltd. 2010 (262) E.L.T. 545 (Tri. Chennai), wherein it was held that when molasses is obtained as a by-product in a sugar mill in course of manufacture of sugar and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ethyl alcohol of alcohol of an alcoholic strength by value of 80% vol. or higher , that from this comparison, it is clear that the Central Excise Heading 2207 covers only the denatured ethyl alcohol and other denatured spirits of any strength and it does not cover the un-denatured ethyl alcohol, that the un-denatured ethyl alcohol is, therefore, non-excisable, that to the extent any Cenvat credit availed inputs have been used in the manufacture of non-excisable goods, the Cenvat credit would not be admissible, that in view of this, the Cenvat credit in respect of the molasses, to the extent the same was used in the manufacture of non-excisable goods namely rectified spirit/extra-neutral alcohol has been correctly denied, that as regards the benefit of Notification No. 67/95-CE, the benefit of this exemption is available only to the goods produced in a factory which have been used in the same factory for manufacture of final products as specified in the table annexed to this notification, that the final product specified in Column No. 2 of the table to this notification are the goods falling under 1st Schedule to the Central Excise Tariff Act other than matches, fabri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been used in or in relation to generation of electricity sold outside, the Cenvat credit would not be admissible. However, the appellant s plea is that they have already complied with the requirement of Rule 6 (3) (ii) readwith Rule 6 (3A) of the Cenvat Credit Rules. This is a question of fact which can be examined only at the stage of final hearing. 7. The duty demand of Rs. 6,35,38,125/- is in respect of clearances of molasses for captive consumption to the distillery by availing exemption under Notification No. 67/95-CE. According to the Department, this duty is chargeable in respect of the quantity of the molasses which was used in the manufacture of non-excisable final product rectified spirit/extra neutral alcohol. According to the appellant, rectified spirit/extra neutral alcohol are excisable goods with nil rate of duty and since according to them, the proportionate credit has been reversed, the conditions for exemption under Notification No. 67/95-CE stand satisfied and hence they would be eligible for this exemption. The contention of the Department is that rectified spirit/extra neutral alcohol are non-excisable products and hence to the extent the molasses was used i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty exemption under Notification No. 67/95-CE is available only to the goods falling under 1st Schedule to the Central Excise Tariff Act other than high speed diesel and motor spirit commonly known as petrol manufactured in a factory and used within the same factory in the manufacture of any goods falling under 1st Schedule to the Central Excise Tariff Act, 1985 other than matches, fabrics etc. When the un-denatured ethyl alcohol of any strength does not figure in the 1st Schedule to the Central Excise Tariff Act, 1985, the excisable goods produced in a factory and used within that factory for production of un-denatured ethyl alcohol would not be eligible for this exemption. Therefore, we are of prima facie view that the duty exemption in respect of molasses manufactured in the appellant s factory and captively cleared to the distillery unit would not be admissible, to the extent the molasses was used in the manufactured of un-denatured ethyl alcohol. Therefore, we are of prima facie view that the duty demand of Rs. 6,35,38,125/- in respect of the clearances of molasses for captive use to the distillery unit appears to be on a strong footing. Since the un-denatured ethyl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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