CESTAT Bangalore grants relief to appellant on Notification No. 67/95 for molasses clearances

The Appellate Tribunal CESTAT Bangalore ruled in favor of the appellant in a case concerning the application of Notification No. 67/95 to molasses clearances. The appellant successfully demonstrated the exercise of the option under Rule 6(3A) of the CENVAT Credit Rules for exempted products, leading to the exemption under the said notification. The Tribunal granted relief by waiving the dues and staying the recovery until the appeal's disposal, providing respite to the appellant amidst ongoing legal proceedings.

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Issues: Application of Notification No. 67/95 to clearances of molasses, demand of duty, exercise of option under Rule 6(3A) of CENVAT Credit Rules, waiver of dues, stay of recovery.

Analysis:

1. Application of Notification No. 67/95: The appellant, a manufacturer of sugar and molasses, faced a demand of duty amounting to Rs. 3,47,23,712/- for clearances of molasses used in the manufacture of both dutiable and non-dutiable products. The Commissioner initially held that the notification was not applicable due to the mixed usage of molasses. However, the appellant argued that they had exercised the option under Rule 6(3A) of the CENVAT Credit Rules for exempted products like ethanol and rectified spirit, thus justifying the exemption under Notification No. 67/95.

2. Exercise of Option under Rule 6(3A) of CENVAT Credit Rules: The appellant contended that they had reversed the credit attributable to inputs used in exempted products, amounting to only Rs. 1,78,261/-, as per Rule 6(3A) of the CENVAT Credit Rules. The Tribunal agreed with the appellant's position, noting that the appellant had indeed exercised the option under the said rule, and therefore, should be extended the benefit of the Notification No. 67/95.

3. Waiver of Dues and Stay of Recovery: After considering the submissions from both sides and examining the records, the Tribunal held that the appellant had made a strong case for waiver of the dues as per the impugned order. Consequently, the Tribunal ordered the waiver of pre-deposit of dues and stayed the recovery thereof until the disposal of the appeal, providing relief to the appellant during the ongoing legal proceedings.

In conclusion, the judgment by the Appellate Tribunal CESTAT Bangalore addressed the issues surrounding the application of Notification No. 67/95 to molasses clearances, the exercise of the option under Rule 6(3A) of the CENVAT Credit Rules, and the subsequent waiver of dues and stay of recovery, ultimately ruling in favor of the appellant based on the exercise of the said rule and granting relief in the form of waiver and stay of recovery.

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