TMI Blog2016 (4) TMI 1189X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant. - Application No. E/MA (Extn.)-97214/2014-Mum and Appeal Nos. E/86643, 89187/2013, E/85417/2014, E/89092/2013, E/85361-85362/2015 and E/86504, 89136, 89510, 87182, 89195 & 86799/2013-Mum - Final Order Nos. A/87052-87063/2016-WZB/EB and Misc. Order No. M/87064/2016-WZB/EB - Dated:- 15-4-2016 - Shri M.V. Ravindran, Member (J) and C.J. Mathew, Member (T) Shri M.H. Patil with Sachin Chitnies, A.P. Kolte, Advocates and S.B. Awate, Consultant, for the Appellant. Shri Hitesh Shah, Commissioner (AR) and Ajay Kumar, Jt. Commissioner (AR), for the Respondent. ORDER [Order per : C.J. Mathew, Member (T)]. - We take up this batch of appeals for disposal together as the issue in dispute is identical. Appeal No. Party Order-in-original Duty Penalty 1. E/86643/2013 Sagar Industries Distilleries Pvt. Ltd. 03/CEX/2013, dated 21st January, 2013 ₹ 13,72,83,114/- ₹ 13,72,83,114/- 2. E/85417/2014 29/CEX/2013, da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgeable to State excise duty. The manufacturing process involves addition of water and yeast to the molasses which ferment to transform the mixture into raw ethyl alcohol and carbon dioxide. Carbon dioxide is piped out for sale to manufacturers of carbonated water and to users in industrial activity. Raw ethyl alcohol is subject to distillation which produces rectified spirit and waste water. Waste water is fed into bio-digesters to produce bio-gas which comprises methane, carbon dioxide and hydrogen sulphide. Rectified spirits finds use in production of alcohol for human consumption. Other industrial demand is catered to by denaturing of the rectified spirit to segregate the two owing to the control and monitoring of potable alcohol being assigned to State Governments and in accordance with laws enacted by the State legislatures. Denatured spirit is subject to duties of Central Excise while potable alcohol is outside the purview of excise duty on manufactured goods. 3. The Seventh Schedule to the Constitution of India has by Entry 84 in List I accorded jurisdiction to the Union to levy duties of excise on tobacco and other goods manufactured or produced in India except (i) alc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en under Rule 6(2) for manufacture and clearance of excisable goods. Should such separate accounts be not maintained, Rule 6(3), manufacturers have the option to pay an amount equal to 6% of value of exempted goods or an amount determined under Rule 6(3A). 7. Appellants were issued with show cause notices for varying periods between April, 2007 to March, 2013 seeking to deny credit of duty paid on molasses during this period and to seek recovery of credit utilized for clearance of denatured rectified spirit. The claim of Revenue was that reversal of proportional Cenvat credit was not sufficient compliance of obligations under Rule 6 supra. The original authority rendered a finding that, with effect from 28th February, 2005, rectified spirit was non-excisable owing to alteration of the tariff entry in the Schedule to the Central Excise Tariff Act, 1985 as discussed supra. He also disallowed the credit of duty paid on molasses on the ground that the final product is entirely non-excisable and, thus, exempt. Further holding that Rule 6(3)(i) was not required to be followed for non-excisable goods and conceding that the amount paid by the appellants in accordance with the said Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at such usage of ethyl alcohol was not captive consumption within the meaning of Central Excise Rules, it was submitted that this fresh process of manufacturing denatured alcohol used ethyl alcohol, a non-excisable product, as input and, hence, had to be cleared on payment of duty without the benefit of Cenvat credit. Placing reliance on L Oreal India Private Ltd. v. Commissioner of Central Excise, Pune-I [2012 (281) E.L.T. 113 (Tri.-Mumbai) = 2012 (28) S.T.R. 443 (Tribunal)], Orion Appliances Ltd. v. Commissioner of Service Tax, Ahmedabad [2010 (19) S.T.R. 205 (Tri.-Ahmd.)] and Madhukar Sahakari Sakhar Karkhana Ltd. v. CCE C, Nasik [2012 (285) E.L.T. 552 (Tri.-Mumbai)], it was submitted that duty paid on inputs used to manufacture goods and render services that were outside the scope of the taxing statute could not be taken as credit. Relying on Ratnamani Metals Tubes Ltd. v. Commissioner of Central Excise, Ahmedabad [2012 (285) E.L.T. 274 (Tri.-Ahmd.)] and Sree Rayalseema Hi-Strength Hypo Ltd. v. Commissioner of Customs Central Excise, Tirupati [2012 (278) E.L.T. 167 (A.P.)], the correctness of the adjudicating authority in invoking the extended period was canvassed. 10. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in Sakthi Sugars Ltd. v. Commissioner of Central Excise, Salem (Final Order No. 802/2007, dated 26th June, 2007) [2008 (230) E.L.T. 676 (Tri.-Chennai)]. The Hon ble Supreme Court has accorded its approval to the order of the Tribunal by declaring that there were no sound reasons for interference with it. The decision of the Tribunal in that matter, therefore, acquires significance in resolving the present dispute. We also notice that in Re : Sakthi Sugars Ltd., the Tribunal placed reliance on Godavary Sugar Mills Ltd. and Others v. Commissioner of Central Excise [2007 (212) E.L.T. 234 (T)] which has been discussed supra. 14. In the matter before the Hon ble Supreme Court, the Tribunal had ruled in favour of the assessee who manufactures rectified spirits and denatured alcohol from molasses produced by the assessee as a by-product of manufacture of sugar. The molasses was eligible for exemption from duty upon being captively consumed for manufacture of denatured spirits under Notification No. 67/95-C.E., 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct appeal filed by SSL. From the above decision, it is clear that denatured alcohol is acknowledged as an excisable goods 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. The above decision approved by the Hon ble Supreme Court would be applicable to both. It is, thus, amply clear that 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. 15. For the above reason, we set aside the impugned orders and allow the appeals. MA (Extn.) disposed of. (Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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