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Issues: Whether rectified spirit and ethyl alcohol are the same commodity for the purpose of Tariff Item 22072000 of the Central Excise Tariff, and whether the show cause notices denying CENVAT credit on the ground that rectified spirit does not find place in the tariff were sustainable.
Analysis: The appellants operated a composite unit in which molasses was fermented to obtain ethyl alcohol, which was then denatured for use as industrial spirit. The dispute turned on whether rectified spirit emerging in the process was a distinct non-excisable product or merely another form of ethyl alcohol. The Tribunal relied on the Supreme Court's observation that rectified spirit for industrial process is purified spirit having not less than 95% by volume of ethyl alcohol, and held that ethyl alcohol and rectified spirit are one and the same. Since rectified spirit used otherwise than for human consumption falls within Tariff Item 22072000, the premise on which the demand was raised failed.
Conclusion: The show cause notices were unsustainable, the impugned orders were set aside, and the appeals were allowed with consequential relief.
Ratio Decidendi: Rectified spirit used for industrial purposes is the same as ethyl alcohol and, when it falls within the tariff entry, denial of CENVAT credit on the ground of a supposed non-tariff intermediate product is unsustainable.
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