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TMI Blog2023 (7) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... they had paid an amount equal to 6% of the value of Rectified Spirit under Rule 6 (3) (i) of Cenvat Credit Rules, 2004. With effect from 01.03.2005, the Rectified Spirit was omitted from Heading 2207 of the Schedule to the CETA, 1985. It therefore appeared to the department that Rectified Spirit is not excisable goods and does not fall under the term 'final product'. The availment of input credit of the duty paid on molasses used in the production of Rectified Spirit (not being a final product) appeared to be therefore incorrect. Consequently, the show cause notice dated 19.07.2013 was issued proposing to deny the credit availed on molasses used in the manufacture of Rectified Spirit and also to recover the same along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand along with interest and imposed penalty. Aggrieved by the said order, appellant is now before the Tribunal. 2.1 Ld. Counsel Sri S. Muthuvenkatraman appeared and argued for the appellant. It is submitted that the Department has taken the view that rectified spirit not being excisable goods, and not covered by the term "Final product", availment of input Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spirit" is non-excisable or not after restructuring of Tariff w.e.f 01.03.2005 was a matter of dispute before the Tribunal in the following cases, wherein, it was held that both rectified spirit and denatured spirit are covered under same heading 2207 20 00 * Ugar Sugar Works vs CCE, Belgaum - 2008 (232) ELT 81 (T) * Ugar Sugar Works Ltd vs CCE, 2007 (214) ELT 334(T) * Shri Hiranyakeshi Sahakari Sakkare Karkhana Niyamit Vs CCE - Final Order No. 459/2007 dt. 18.4.2007 - 2008 (232) ELT 81 * Sakthi Sugars Ltd vs CCE (2008) 230 ELT 676 * Thiru Arooran Sugars Ltd vs CCE - (2009) TIOL 372 * Since Rectified Spirit was excisable but exempt under a notification, appellants had reversed 6% value of exempted goods viz Rs.5,89,89,475/- and complied with the obligation under Rule 6 of Cenvat Credit Rules 2004. * For the above reasons, Rectified Spirit can be considered as Final Product for the purpose of central excise and consequently, appellant is eligible for input credit on the molasses used in its production subject to compliance of Cenvat Credit Rule 6. * The appellant was filing annual intimation informing the department about their intention to reverse 5% / 6% of the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohol of an alcoholic strength of 80% and above cannot be used for human consumption. Similarly, Ethyl Alcohol, denatured also cannot be used for human consumption. Thus, the character and purpose of both types of spirits is the same. Rectified spirit is undenatured ethyl alcohol of about 95% alcoholic strength (more than 85%). Thus, by virtue of same character and purpose viz being not suitable for human consumption, in terms of above interpretative Rule 4 of Rules for classification, Rectified Spirit though not specifically mentioned in the tariff and though not excluded from the scope of chapter 22 is classifiable under Heading 2207 only. 2.4 It is submitted that the above classification of Rectified spirit is confirmed by Tribunal's decisions referred above. 3. The Ld. Counsel submitted that therefore, the reasoning adopted by the Commissioner to hold that the rectified spirit is not excisable by virtue of the introduction of 8-digit tariff cannot be sustained. It is also submitted that when the new 8-digit central excise tariff was introduced in 2005, Government issued a circular No.808/5/2005-cx. dated 25.2.05 wherein in the context of notification no.03/2005-CE dated 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed. Ld. Counsel prayed that appeal may be allowed. 8. Ld. A.R Sri M. Ambe appeared and argued for the Department. It is submitted that Note 4 to Chapter 22 of the Central Excise Tariff Act, 1985, excludes 'Alcoholic liquors for human consumption' from the scope of the Chapter and hence, the appellant has raised the contention that any alcohol that is not fit for human consumption should automatically find a place within it. It is submitted by Ld. A.R that the original authority has considered this argument in para-8 of the impugned order. Chapter Note 4 solely defines the scope of exclusions from the Chapter. After the introduction of 8 digit sub headings w.e.f. 1.3.2005 'Rectified Spirit' does not come under the category of excisable goods. Further rectified spirit is the primary raw material for the production of alcoholic beverages for human consumption. Denaturing of ethyl alcohol is an irreversible process of adding methanol or some other poisonous substance to make it unfit for human consumption. Rectified spirit, on the other hand, is unfit for human consumption because of its high concentration which can be used for both beverages as well as for industrial applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d decision was upheld by the Apex Court as reported in 2022 (379) ELT 556 (SC). Relevant part of the said final order of the Tribunal is noteworthy and reproduced as under : "8.3 We find that the present dispute is emerged due to restructuring of the Tariff from 6 digit to 8 digit. CBEC vide Circular No. 808/5/2005-CX, dated 25-2-2005 regarding implementation of Tariff from 6 Digit to 8 Digit, clarified as under :- "Implementation of the Central Excise Tariff (Amendment) Act, 2004 (8- Digit Classification Code) - Clarification regarding. I am directed to draw your attention to this Department's Notification No.6/2005-C.E. (N.T.), dated 24-2-2005, issued from F.No.4/3/2002-CX.I (Part-II), which notifies that the Central Excise Tariff (Amendment) Act, 2004 will come into force with effect from 28th February 2005. The said Act is being uploaded on the CBEC website, (www.cbec.gov.in). 2. Accordingly, all the field officers must ensure implementation of the amended Tariff Act (including 8-digit classification code in it's new 1st & 2nd Schedules) from 28-2-2005. Trade should also be suitably informed immediately and guided in the matter so that the transition from 6-digit to 8-d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Difficulties) Rules, 2005. (2) They shall come into force on the date of the commencement of the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005). 2. In each of the rules made under Section 37 of the Central Excise Act, 1944 (1 of 1944), and in each of the notifications issued under these rules, for any reference to the Chapter, heading or sub-heading of the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as the case may be, relating to any goods or class of goods, wherever referred to in the said rules or notifications, the corresponding reference to the Chapter, heading or sub-heading or tariff item, of the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as amended by the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005) shall be deemed to have been substituted. No. 4/3/2002-CX.I (Pt.II) Abhay Kumar Srivastav Deputy Secretary to the Government of India Note : This notification intends to take care of the technical changes adopted in the numbering scheme for Central Excise classification through the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005). These amendments d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal along with stay application before the Tribunal. By stay order, the Tribunal directed the assessee to pre-deposit a sum of Rs. One crore out of Rs. 1.14 crores in accordance with the provisions of Section 35F of the Central Excise Act, 1944. The Hon'ble High Court directed the Tribunal to decide the stay application afresh considering the decisions to take prima facie view whether they are applicable to the facts of the impugned case before directing pre-deposit. The learned AR also relied upon the decision of the Tribunal in the Ugar Sugar Works Ltd. (supra), which we have already discussed above. In the case of Kothari Sugars & Chemicals Ltd. v. CCE - 2010 (262) E.L.T. 545, the Tribunal remanded the matter. In the case of Venkateshwara Winery & Distillery Ltd.v. CCE - 2013 (295) E.L.T. 306, the Tribunal granted stay. In our considered view, none of the case laws relied upon by the learned AR are applicable in the facts and law of the case. 8.10 The learned AR referred Rule 48 of Tamilnadu Distillery Rules, 1985, Govt. of Tamilnadu, to establish that Rectified spirit is fit for human consumption. We find that the adjudicating authority accepted prior to 1-3-2005 Rectified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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