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of <h1>Tribunal allows Cenvat credit for molasses in spirit manufacturing</h1> <h3>CC & CE, VISAKHAPATNAM-II Versus NAVABHARAT FERRO ALLOYS LTD.</h3> CC & CE, VISAKHAPATNAM-II Versus NAVABHARAT FERRO ALLOYS LTD. - 2007 (210) E.L.T. 705 (Tri. - Bang.) Issues involved:The issues involved in this case are the entitlement of availing modvat on molasses used in the manufacture of rectified spirit and denatured spirit, the applicability of Rule 57AD(II) to the case, and the availability of Cenvat credit of duty paid on molasses.Entitlement of availing modvat on molasses:The first appeal was filed by the Revenue and the second appeal by the assessee. The lower authorities held that the Respondent is entitled to avail modvat on molasses used in the manufacture of rectified spirit and denatured spirit. The Revenue contended that rectified spirit is not liable for Central Excise duty, therefore no modvat credit can be taken on the molasses used in its manufacture. The Commissioner (A) upheld the order of the lower authority, stating that the Respondent complied with the requirement of paying 8% of the value of the exempted rectified spirit cleared, thus legally sustaining the vailment of credit on common inputs. The Tribunal upheld the impugned order and rejected the Revenue's appeal.Applicability of Rule 57AD(II):The Commissioner held that the Respondent is covered by Rule 57AD(II) and that the reliance on a circular dated after the period involved in the case is not relevant. The Commissioner discussed the applicability of Rule 57AD(II) and stated that the Respondent complied with the requirements, therefore legally entitled to the credit on common inputs. The Tribunal upheld the impugned order and rejected the Revenue's appeal.Availability of Cenvat credit of duty paid on molasses:In the second appeal, the Commissioner held that molasses is not directly used in the manufacture of denatured spirit but in the manufacture of rectified spirit, making the Cenvat credit of duty paid on molasses not available. However, the Tribunal held that molasses is a common input for both rectified spirit and denatured spirit, entitling the appellant to the credit when they pay 8% of the sale value of the rectified spirit. The impugned order was set aside, and the assessee's appeal was allowed with consequential relief.
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