Appeal allowed for exemption under Notification No.67/95-CE. Molasses deemed common input for dutiable and exempted products.

The appeal was allowed in favor of the appellants, confirming their eligibility for exemption under Notification No.67/95-CE. The Tribunal ruled that molasses was a common input for both dutiable and exempted products, entitling the appellants to the benefit of the notification. The Commissioner (Appeals) set aside the interest demand, stating that the reversal of credit under Rule 6 should align with the clearance of exempted goods, not molasses for captive use. Consequently, the interest demands were deemed unsustainable, and the appeal was allowed with consequential reliefs.

---

---

Issues:
Demand of interest on delayed payment of duty on molasses; Applicability of Notification No.67/95-CE; Reversal of proportionate credit under Rule 6 of CENVAT Credit Rules, 2004; Eligibility for exemption under Notification No.67/95; Interest liability on reversal of duty; Allegation of violation of conditions of Notification No.67/95-CE.

Analysis:
The appeal was filed against the demand of interest on delayed payment of duty on molasses. The appellants had a composite unit for the manufacture of various products. The issue arose from the use of molasses as inputs for the production of rectified spirit and denatured spirit. The department alleged that the appellants were not entitled to exemption under Notification No.67/95-CE and should have paid duty at the time of clearance of molasses. The original authority confirmed the demand of interest for the normal period but set aside the balance demand for the extended period. Both the assessee and the department filed appeals against this order. The Commissioner (Appeals) allowed the department's appeal, leading to the current appeal by the assessee.

The main contention was whether the appellants were using molasses as a common input for both dutiable and exempted products. The Tribunal had previously ruled in favor of the appellants, stating that molasses was a common input for both products. The benefit of exemption under Notification No.67/95-CE could not be denied to the appellants based on this ruling. The appellants had complied with the conditions of the notification by reversing proportionate credit under Rule 6 of CENVAT Credit Rules, 2004.

The Commissioner (Appeals) considered the law correctly and set aside the interest demand, as the appellants were eligible for the benefit of Notification No.67/95. The reversal of amount under Rule 6 should be concurrent with the clearance of the exempted goods, not the clearance of molasses for captive use. Therefore, no interest liability existed, and the demands for interest had to be set aside. The impugned order confirming the interest demand was deemed unsustainable, and the appeal was allowed with consequential reliefs.

In conclusion, the judgment clarified the applicability of Notification No.67/95-CE, the reversal of proportionate credit under Rule 6, and the interest liability on such reversal. The decision favored the appellants, emphasizing their eligibility for exemption and the incorrectness of the interest demands based on the reversal of duty.

---