Denatured ethyl alcohol manufacturing supports Cenvat credit where denaturation is proved during transport and process evidence is unrebutted.

Denatured ethyl alcohol was treated as manufactured for Cenvat credit purposes where the evidence showed ethyl alcohol was mixed with denaturing material in the tanker and the process was completed during transportation. The dispute centred on the place of denaturation, but there was no proof that the process occurred outside the distillery or that the assessee departed from the accepted manufacturing practice recognised earlier by the department. On that basis, the denial of credit could not be sustained, and the demand was held unsustainable with the benefit affirmed.

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Issues: Whether Denatured Ethyl Alcohol was manufactured as claimed by the assessee so as to justify the availment of Cenvat credit and defeat the demand raised under the Central Excise law.

Analysis: The dispute turned on the place where denaturation took place, not on whether the product ultimately manufactured was Denatured Ethyl Alcohol. The record showed that ethyl alcohol was mixed with denaturing material in the tanker and that the process was completed during transportation. There was no evidence establishing that the denaturing process took place outside the distillery or that the assessee had failed to follow the accepted manufacturing practice earlier recognized by the department. In the absence of proof rebutting the manufacturing activity as accepted by the Tribunal, the denial of the benefit could not be sustained.

Conclusion: The product was manufactured for the purposes of the scheme and the assessee was entitled to the benefit; the challenge to the Tribunal's view failed.

Final Conclusion: The demand was not sustainable and the assessee's entitlement to the credit benefit stood affirmed.

Ratio Decidendi: Where the evidence does not show that the denaturing process occurred outside the assessee's premises and the manufacture of the final product is otherwise established, the credit benefit cannot be denied merely on a disputed location of completion of the process.

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