2014 (1) TMI 418 - AT - Central Excise

Appeal Allowed for Cenvat Credit on Capital Goods in Manufacturing Spirit

The Tribunal allowed the appeal in favor of the appellant, who was denied Cenvat credit on capital goods used in manufacturing fractionated pure/impure ... Denial of Cenvat credit on the capital goods - Plant and machinery not used in the manufacture of Denatured Spirits, but in fractionated pure/impure spirit which is a non-excisable product – Held that:- Following RANA SUGAR LTD. Versus COMMISSIONER OF CENTRAL EXCISE, LUDHIANA [2012 (11) TMI 299 - CESTAT, NEW DELHI] - as much as the capital goods were used in the process of manufacture of intermediate exempted products, which were further used in the manufacture of dutiable final products, credit cannot be denied – order set aside – Decided in favour of Assessee. Issues:Denial of Cenvat credit on capital goods used in the manufacture of fractionated pure/impure Spirit.Analysis:The appellant, engaged in manufacturing fractionated pure/impure Spirit used in the production of Rectified Spirit (RS)/Extra Neutral Alcohol (ENA)/Denatured Spirit, faced proceedings for denial of Cenvat credit on capital goods. The contention was that although the machinery was used for non-duty paid goods, these products were further processed into denatured spirit, attracting duty payment. Citing a precedent involving M/s Rana Sugar Ltd., the Tribunal ruled that if capital goods were used in manufacturing exempted products later used in dutiable final products, credit cannot be denied. This principle was acknowledged by the Revenue in a separate case, leading to the Commissioner dropping the demand. Consequently, the impugned order denying credit was set aside, and the appeal was allowed in favor of the appellant.