TMI Blog2017 (12) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants reversed 10% of the price of Un-Denatured Ethyl Alcohol in terms of Rule 6(3)(b). Whether with effect from 01.03.2005 Un-Denatures Ethyl Alcohol is an exempted product-as alleged by department or non-excisable product as contended by appellant? - Held that: - The erstwhile Tariff Heading 22.04 covered by both Denatured and Un-Denatured Ethyl Alcohol. The Denatured Ethyl Alcohol was subject to 16% duty. Alcohol other than Denatured Ethyl Alcohol (Un-Denatured Ethyl Alcohol) carried "NIL" rate of duty. In the revised Tariff Schedule (w.e.f. 01.03.2005), there is no corresponding Heading/sub-heading for Undenatured Ethyl Alcohol. The Central Excise as well as Customs Tariff was aligned and in the Customs Tariff Schedule 'Un-Denatured Ethyl Alcohol' falls under Tariff heading 22.08. is left blank without mentioning any goods. From the above, it can be seen that the arguments of the learned counsel for appellant that w.e.f. 01.03.2005, Un-Denatured Ethyl Alcohol is non- excisable is not without force. Un-Denatured Alcohol are not specified goods under Rule 6(3)(a) and the demand is unjustified - appellant is not liable to pay 10% of the price in terms of Rule 6(3)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest and also imposed equal penalty under Rule 15(1) of Cenvat Credit Rules, 2004 besides ordering appropriation of the amounts already reversed by the appellant. 2. Being aggrieved, the appellant filed appeal before this Tribunal. Meanwhile, in a similar matter, the Tribunal in the case of M/s. Rajshree Sugars Chemicals Ltd. Vs Commissioner of Central Excise, Puducherry reported in 2016 (343) E.L.T.462 (Tri. -Chennai) had held that demand raised in terms of violation of Rule 6(3) (a) (i), alleging wrongful availment of credit on molasses used in manufacture of Rectified Spirit/Denatured Ethyl Alcohol, which is exempted goods is not sustainable. The appellant contended that since the final products are un-denatured product, the appellant need not even pay an amount @10% of the price of the un-denatured product in terms of Rule 6(3)(b). The Tribunal vide the Interim Order No.41001/2014, dated 11.2014 directed the appellant to deposit 10% of the price [in terms of Rule 6(3)(b) and set aside the penalty. Against this order, the appellant filed Civil Miscellaneous Appeal before Hon'ble Madras High Court and the Revenue also filed appeal against the order as the demand raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised. (ii) That the Un-Denatured Ethyl Alcohol is not an excisable goods and, therefore, the appellant need not maintain separate account. Though, Commissioner holds that Un-Denatured Ethyl Alcohol is non-excisable, demands the duty under Rule 6(3)(a), which is highly erroneous. (iii) With effect from 28.05.2005, the Central Excise Tariff was modified to 8-digit coding system. In the earlier 6-digit Tariff system, Un-Denatured Ethyl Alcohol was accommodated in heading 22.04. However, in the 8-digit Tariff, 2204 has been left blank, whereas, Denatured Ethyl Alcohol is found in heading 2207. There is no heading for Un-Denatured Ethyl Alcohol. Accordingly, with effect from 28.02.2005, Un-Denatured Ethyl Alcohol ceased to be excisable goods and also ceased to be specified goods in clause (a) of sub-rule 3 of Rule 6 of Cenvat Credit Rules, Since, Un-Denatured Ethyl Alcohol is non-excisable goods, during the relevant period, the appellant is eligible for exemption in terms of Notification No.67/95, dated 16.03.1995. In this regard, he relied on the Tribunal's decision in the case of Kothari Sugars Chemicals Ltd. Vs Commissioner of Central Excise, Trichy reported in 2010 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts is payable. Rule 6(3) (b) - If the exempted final product is not specified in clause (a) of Rule 6(3), then an amount equal to 10% of the sale price of the exempted product is payable. 7.1 Admittedly, the appellants have not maintained separate accounts. However, after January, 2006, the appellants reversed 10% of the price of Un-Denatured Ethyl Alcohol in terms of Rule 6(3)(b). It is the case of the appellants that they are not bound to pay even this amount and has reversed only on pressure from the department. The department alleges that appellant has to reverse the entire credit attributable to molasses in terms of Rule 6(3)(a). 8. The issue revolves around the question, whether with effect from 01.03.2005 Un-Denatures Ethyl Alcohol is an exempted product - as alleged by department or non-excisable product as contended by appellant. 9. Till 28.02.2005, Un-Denatured Ethyl Alcohol fell under Tariff Heading 22.04 of CETA. Thus, being specified goods under Rule 6(3)(a). The appellants paid/reversed credit attributable to inputs/molasses. From 28.02.2005, when 8-digit system was introduced, there was no excisable goods covering Tariff heading 22.04. The departmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd Schedule to the Central Excise Tariff Act, 1985 as being subject to duty of excise. As the product 'Un-Denatured Ethyl Alcohol' is not specified in CETA, 1985, and being not goods specified in Rule 6(3)(a). We have to hold that the demand raised for contravention of Rule (3)(a) is against the provisions of Central Excise Law. 12. The learned Authorised Representative, appearing for department has relied on the discussions made in para 4 of Ugar Sugar Works Ltd. (supra). The said discussions are not with regard to Un-Denatured Spirit and, therefore, would be of no assistance to the Revenue. The Tribunal in the case of Rajshree Sugars Chemicals Ltd. (supra) has also made detailed discussion in respect of Rectified Spirit and Extra Neutral Alcohol, and the issue was held in favour of assessee. The appeal filed by department is admitted by Hon'ble Supreme Court. 13. From the above discussions, we hold that Un-Denatured Alcohol are not specified goods under Rule 6(3)(a) and the demand is unjustified. We also hold that appellant is not liable to pay 10% of the price in terms of Rule 6(3)(b) of Cenvat Credit Rules, 2004. 14. In the result, the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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