Cenvat credit on molasses-based spirits was not reversible, and no Rule 6(3)(b) amount was payable on duty-free clearances.

Spirits obtained from processing molasses were treated alike for Rule 6(3)(b) purposes, and precedent held that rectified spirit, un-denatured ethyl alcohol and ethyl natural alcohol did not require reversal of Cenvat credit merely because they were cleared without central excise duty. On that reasoning, the assessee was not liable to reverse credit attributable to molasses used in manufacturing rectified spirit, ethyl natural alcohol and denatured spirit, nor to pay 8% or 10% of the value of such clearances under Rule 6(3)(b). The demand was set aside in favour of the assessee.

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Issues: Whether the assessee was required to reverse Cenvat credit attributable to molasses used in the manufacture of rectified spirit, ethyl natural alcohol and denatured spirit, or to pay 8% or 10% of the value of such clearances under Rule 6(3)(b) of the Cenvat Credit Rules, 2004.

Analysis: The disputed clearances related to spirits emerging from processing of molasses. The issue had already been settled by precedent that, in respect of rectified spirit, un-denatured ethyl alcohol and ethyl natural alcohol, no payment under Rule 6(3)(b) was required and the factual position did not warrant reversal of Cenvat credit. The reasoning applied the principle that all alcohols resulting from processing of molasses are to be treated alike for this purpose.

Conclusion: The assessee was not liable to reverse Cenvat credit or pay any amount under Rule 6(3)(b) on the clearances in question, and the demand was set aside in favour of the assessee.

Ratio Decidendi: Where spirits produced from molasses are cleared, no reversal of Cenvat credit is required and no amount under Rule 6(3)(b) is payable merely because the goods are cleared without central excise duty.

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