Non-excisable potable alcohol under Central Excise levy requires refund verification and remand on factual issues.

Potable alcohol for human consumption falls outside the Central Excise levy under Chapter Note 4 to Chapter 22 and the constitutional allocation of legislative power, so it is treated as non-excisable rather than merely exempted. On that basis, Cenvat credit linked to molasses used in relation to such non-excisable production could not be retained under the Cenvat Credit Rules, 2004. The refund claim for cess paid on clearances of potable alcohol had merit, but quantification required fresh verification of the payment method, reversal of credit, interest payment, and the extent of any time-barred portion. The matter was remanded for reconsideration on those factual aspects.

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Issues: Whether potable alcohol is a non-excisable product outside the Central Excise levy, and whether the refund claim relating to cess paid on its clearances required fresh verification before quantification.

Analysis: Potable alcohol for human consumption is outside the scope of Central Excise levy by virtue of Chapter Note 4 to Chapter 22 and the constitutional allocation of legislative power. As the product is non-excisable, the Cenvat Credit Rules, 2004 apply only to excisable goods, and credit taken in relation to molasses used for such non-excisable product could not validly be retained. The claim for refund of cess paid on potable alcohol therefore had merit, but the record did not clearly establish the mode of payment, the verification of reversal of credit, the payment of interest, or the extent to which part of the claim was time barred.

Conclusion: Potable alcohol was held to be non-excisable, the rejection of refund on the footing that it was merely exempted was found incorrect, and the matter was remanded for fresh consideration after verification of the relevant facts.

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