Tribunal dismisses Revenue's appeal on input service credit eligibility for exempted rectified spirit.

The Tribunal dismissed the Revenue's appeal challenging the eligibility of credit on input services used in the manufacture of rectified spirit exempted from Excise duty. The Tribunal found that there was a lack of evidence regarding the actual clearance of exempted rectified spirit by the respondent and emphasized the respondent's argument concerning the application of Rule 6(5) of Cenvat Credit Rules, 2004.

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Issues:
- Eligibility of credit on input services used in the manufacture of rectified spirit exempted from Excise duty.
- Interpretation of Rule 6(5) of Cenvat Credit Rules, 2004.
- Lack of evidence regarding actual clearance of exempted rectified spirit by the respondent.

Analysis:
1. Eligibility of credit on input services: The appeal was filed by the Revenue against the order of the Commissioner of Central Excise, Meerut-I, regarding the eligibility of credit on various input services availed by the respondents for the manufacture of sugar, molasses, and de-natured spirit. The Revenue raised doubts as these services seemed to be used in the manufacture of rectified spirit, which is exempted from Excise duty. The original authority indicated that 98% of rectified alcohol production is used for de-natured alcohol cleared on duty payment. The Revenue contended that the remaining 2% should not be eligible for credit on input services.

2. Interpretation of Rule 6(5) of Cenvat Credit Rules, 2004: The respondent argued that Rule 6(5) of Cenvat Credit Rules, 2004, does not apply in this case. They pointed out that as per the rule, when credit is availed on input services of a listed category, there is no need to follow certain provisions unless the services are exclusively used for exempted goods. The respondent listed the services for which credit was availed and claimed that except for a specific amount, all other services were covered by Rule 6(5).

3. Lack of evidence regarding actual clearance of exempted spirit: The Tribunal noted that the Revenue failed to provide evidence regarding the actual clearance of exempted rectified spirit by the respondent to the extent of 2% of total production. The appeal was based on an inference without concrete evidence. Even if it was assumed that 2% of rectified spirit was cleared, the respondent's argument about the applicability of Rule 6(5) needed consideration. The Tribunal found no merit in the Revenue's appeal as there was no evidence to support the claim of ineligible credit on input services.

In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing the lack of evidence supporting the Revenue's claim and the respondent's argument regarding the application of Rule 6(5) of Cenvat Credit Rules, 2004.

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