Tribunal rules undenatured alcohol not excisable under Central Excise Act

The Tribunal ruled that undenatured ethyl alcohol is not excisable under the Central Excise Act, 1944, and thus not subject to excise duty. The appellants were granted the molasses exemption under Notification No. 67/95, pending verification if the alcohol qualifies as alcoholic liquor for home consumption. The Tribunal rejected the department's cross objection against stay orders, remanding the case for further verification and compliance with the conditions of the notification.

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Issues:
1. Interpretation of Notification No. 67/95-C.E. dated 16-3-95 regarding exemption on molasses.
2. Whether undenatured ethyl alcohol is excisable and subject to central excise duty.
3. Verification requirement for undenatured ethyl alcohol being alcoholic liquor for home consumption.
4. Cross objection filed by the department against stay orders.

Issue 1 - Interpretation of Notification No. 67/95-C.E.:
The Tribunal analyzed the applicability of Notification No. 67/95-C.E. dated 16-3-95, which exempts inputs used in manufacturing final products. The exemption is subject to conditions, including the payment of 8% under Rule 57AD. The Tribunal noted that the appellants paid 8% on rectified spirit but were denied the benefit of the Notification due to the period predating an amendment. The Tribunal considered precedents cited by the appellants but found them applicable post-amendment.

Issue 2 - Excisability of undenatured ethyl alcohol:
The Tribunal deliberated on whether undenatured ethyl alcohol is excisable under the Central Excise Act, 1944. It determined that undenatured ethyl alcohol falls outside the central excise levy scope, as it is not subject to excise duty. Consequently, it cannot be considered exempted goods or subject to nil rate of duty. The Tribunal emphasized that excisable goods are those specified in the tariff schedule as subject to excise duty.

Issue 3 - Verification for alcoholic liquor for home consumption:
The Tribunal highlighted the need to verify if undenatured ethyl alcohol, cleared without duty payment, qualifies as alcoholic liquor for home consumption. Pending verification, the appellants were deemed eligible for the molasses exemption under Notification No. 67/95 without being affected by the proviso. The Tribunal remanded the matter to the original authority for this verification, while noting the appellants' lack of refund claim for the 8% amount on denatured ethyl alcohol.

Issue 4 - Cross objection against stay orders:
Regarding the cross objection filed by the department against stay orders, the Tribunal found no provision allowing such objections and consequently rejected them.

In conclusion, the Tribunal set aside the impugned order and remitted the case to the original authority in line with the precedent decision's ratio. The appellants were granted the opportunity for verification concerning the excisability of undenatured ethyl alcohol, ensuring compliance with the conditions of Notification No. 67/95.

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