Rectified spirit treated as ethyl alcohol, making denial of Cenvat credit and exemption unsustainable.

Rectified spirit not meant for human consumption was treated as purified ethyl alcohol falling under tariff item 22072000, following the Supreme Court's description of rectified spirit and the tariff position before and after 01.03.2005. On that basis, the Tribunal held that the premise for denying Cenvat credit and refusing Notification No. 67/95-CE benefit on molasses cleared from the sugar mill to the distillery was unsustainable. The dispute was said to be covered by earlier precedent on similar facts, and the denial of credit and exemption was set aside in favour of the assessee.

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Issues: Whether Cenvat credit was rightly denied and the benefit of Notification No. 67/95-CE could be denied on molasses cleared from the sugar mill to the distillery on the footing that rectified spirit was a non-excisable product.

Analysis: The Tribunal held that the dispute was covered by earlier precedent on similar facts. It noted the tariff position before and after 01.03.2005 and examined whether rectified spirit and ethyl alcohol were distinct commodities. Relying on the Supreme Court's description of rectified spirit as purified ethyl alcohol, the Tribunal treated rectified spirit not meant for human consumption as ethyl alcohol falling under tariff item 22072000. On that basis, the foundation for denying Cenvat credit and the exemption benefit was not sustainable.

Conclusion: The denial of Cenvat credit and the refusal of Notification No. 67/95-CE benefit were set aside, and the appeals were allowed in favour of the assessee.

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