Captive consumption exemption under Notification No. 67/95-CE applied to molasses used for ethyl alcohol for human consumption.

Notification No. 67/95-CE was considered in relation to molasses captively consumed in producing ethyl alcohol for human consumption. The dispute turned on whether such alcohol could be treated as an exempted final product, because the notification excludes inputs used in making final products that are exempt or chargeable to nil duty. The Tribunal relied on earlier authority treating rectified spirit and ethyl alcohol as the same commodity for tariff purposes, and noted that ethyl alcohol not meant for human consumption falls within the tariff entry. On that basis, alcohol for human consumption was not treated as a final product attracting the exclusion, and the denial of exemption was unsustainable.

---

---

Issues: Whether molasses captively consumed in the manufacture of ethyl alcohol for human consumption was entitled to exemption under Notification No. 67/95-CE dated 16.3.1995, so as to deny duty on the molasses used for that purpose.

Analysis: Notification No. 67/95-CE excludes inputs used in the manufacture of final products that are exempted from duty or chargeable to nil rate of duty. The dispute turned on whether ethyl alcohol for human consumption, though not charged to Central Excise duty, could be treated as exempted goods for this purpose. The Tribunal followed the earlier decision holding that rectified spirit and ethyl alcohol are one and the same commodity for tariff purposes, and that ethyl alcohol not used for human consumption falls within the tariff entry. On that reasoning, alcohol for human consumption was not treated as a final product attracting the exclusion relied upon by the department.

Conclusion: The denial of exemption was unsustainable and the appellant was entitled to the benefit of Notification No. 67/95-CE.

---