Rectified spirit treated as ethyl alcohol under tariff item 22072000, defeating denial of CENVAT credit.

Rectified spirit not used for human consumption was treated as ethyl alcohol, because it is a purified spirit containing a high strength of ethyl alcohol and is not a distinct commodity for tariff purposes. On that basis, tariff item 22072000, which covers ethyl alcohol and other denatured spirits of any strength, was held to include rectified spirit. The show cause notice proceeded on the incorrect premise that rectified spirit was a non-excisable intermediate product, so the denial of CENVAT credit could not be sustained.

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Issues: Whether rectified spirit is the same as ethyl alcohol and falls within tariff item 22072000, so that the show cause notice denying CENVAT credit on the footing that rectified spirit is a non-excisable intermediate product is sustainable.

Analysis: The unit manufactured sugar and molasses, and molasses was fermented to obtain ethyl alcohol, which was then denatured. The dispute turned on whether rectified spirit and ethyl alcohol were different commodities. Relying on the Supreme Court's description of rectified spirit as purified spirit having a high strength of ethyl alcohol, the Tribunal held that rectified spirit not used for human consumption is nothing but ethyl alcohol. Since tariff item 22072000 covered ethyl alcohol and other spirits denatured of any strength, rectified spirit was found to be within the tariff entry.

Conclusion: Rectified spirit is ethyl alcohol and is covered by tariff item 22072000; the show cause notice was unsustainable and the denial of CENVAT credit failed.

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