Modvat credit on levy molasses and duty on rectified spirit clearances were upheld on settled precedent

Modvat credit on levy molasses used to manufacture rectified spirit, which was then used to produce Indian made foreign liquor, was held admissible by following the assessee's own earlier decisions on identical facts. The Tribunal also applied the settled view that, where rectified spirit is cleared for such manufacture, the prescribed duty liability under the applicable rule arises on the value of the clearances. As the controversy had already been resolved in the assessee's favour in prior proceedings, the Revenue's challenge was found to have no merit.

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Issues: Whether Modvat credit on levy molasses used in the manufacture of rectified spirit, which was in turn used for manufacture of Indian made foreign liquor, was admissible and whether the assessee was liable to pay 8% of the value of rectified spirit cleared for such manufacture under Rule 57CC.

Analysis: The Tribunal noted that the controversy had already been settled in the assessee's own earlier cases. Those decisions held that Modvat credit was admissible on levy molasses used in the manufacture of rectified spirit and that, where rectified spirit was cleared for manufacture of Indian made foreign liquor, liability arose to pay duty at 8% of the value under the applicable rule. Following that settled view, the Tribunal found no merit in the Revenue's challenge.

Conclusion: The issue was decided in favour of the assessee and against the Revenue.

Ratio Decidendi: Where the Tribunal has already held in the assessee's own case that Modvat credit is admissible on levy molasses used for rectified spirit and that the prescribed percentage liability applies on clearances for manufacture of Indian made foreign liquor, the same view is to be followed in a subsequent appeal on identical facts.

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