Rectified spirit and ethyl alcohol treated as the same commodity, making the excise demand unsustainable.

Rectified spirit and ethyl alcohol were treated as the same commodity for Central Excise Tariff Item No. 22072000. The Tribunal noted that, under the tariff position before 01.03.2005 and after that date, the relevant entries covered ethyl alcohol and denatured spirits, and it relied on the Supreme Court's description of rectified spirit as purified spirit containing not less than 95% ethyl alcohol by volume. On that basis, it held that rectified spirit not used for human consumption is ethyl alcohol, making the show cause notice unsustainable. The impugned order was set aside and consequential relief followed.

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Issues: Whether rectified spirit and ethyl alcohol are the same commodity for the purpose of Central Excise Tariff Item No. 22072000 and, on that basis, whether the demand of duty and denial of CENVAT credit and related reliefs were sustainable.

Analysis: The dispute turned on whether rectified spirit emerging in the process of manufacture was a distinct non-excisable product or only ethyl alcohol in another form. The tariff position prior to 01.03.2005 covered denatured ethyl alcohol and ethyl alcohol under the relevant sub-headings, and from 01.03.2005 Tariff Item No. 22072000 covered ethyl alcohol and other spirits denatured of any strength. Relying on the Supreme Court's description of rectified spirit as spirit purified by distillation having strength of not less than 95% by volume of ethyl alcohol, the Tribunal held that ethyl alcohol and rectified spirit are one and the same.

Conclusion: Rectified spirit not used for human consumption is ethyl alcohol and falls under Tariff Item No. 22072000; the show cause notice was unsustainable and the impugned order was set aside with consequential relief.

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