Captive consumption exemption under Notification 67/95-C.E. remains available when Rule 6 credit reversal is made for exempt final goods.

Notification No. 67/95-C.E. allows exemption for an intermediate product captively consumed in manufacture, provided the manufacturer meets the Rule 6 obligations where exempted final goods are also cleared. For goods falling under Heading 22.04, that obligation is reversal or payment of the credit attributable to inputs used in the exempted final product. On the stated facts, the manufacturer had reversed the relevant credit during the material period, so the exemption remained available and the demand on molasses was not sustainable.

---

---

Issues: Whether molasses captively consumed in the manufacture of rectified spirit was entitled to exemption under Notification No. 67/95-C.E. when the manufacturer had also cleared denatured spirit and had reversed the input credit attributable to the exempted product in terms of Rule 6 of the Cenvat Credit Rules, 2002.

Analysis: Notification No. 67/95-C.E. grants exemption to an intermediate product used captively, subject to the condition that the final product is dutiable or, where exempted goods are also manufactured, the manufacturer complies with the obligations under Rule 6 of the Cenvat Credit Rules, 2002. For goods falling under Heading 22.04 of the First Schedule to the Central Excise Tariff Act, 1985, the relevant obligation is reversal or payment of the credit attributable to inputs used in the exempted final product. The record showed reversal of input credit during the material period, and the dispute was squarely covered by the earlier tribunal view on identical facts.

Conclusion: The exemption was available and the demand raised on molasses was not sustainable.

Ratio Decidendi: Where an intermediate product is captively consumed for manufacture of goods falling under Heading 22.04 and the manufacturer reverses the credit attributable to inputs used in the exempted final product, the benefit of Notification No. 67/95-C.E. cannot be denied merely because the final product is also cleared in exempt form.

---