Tribunal allows Cenvat credit for rectified spirit & Ethyl Alcohol, orders refund

The Tribunal confirmed the eligibility of rectified spirit and Ethyl Alcohol for Cenvat credit, overturning the demand for credit reversal and interest. The appellant was entitled to a refund of the balance amount of Rs. 21,51,812 along with interest from the date of adjustment on 11 July 2016. The Tribunal directed the Revenue to refund the amount with interest till the date of disbursement, allowing the appeal with consequential benefits.

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Issues:
1. Refund of demand on sugar bags consumed for re-processing.
2. Refund of fixed deposit receipts in-cashed by Revenue.
3. Eligibility of rectified spirit and Ethyl Alcohol for Cenvat credit.

Analysis:
1. The appellant, a manufacturer of sugar and molasses with a distillery for alcohol, faced a demand of Rs. 3,44,459 on 3973 bags of sugar allegedly consumed for re-processing. The matter was remanded for re-adjudication, leading to the Additional Commissioner dropping the demand in an order dated 22 June 2016.

2. During the proceedings, the Revenue in-cashed fixed deposit receipts amounting to Rs. 28,44,730 in 2011. Following the appellant's success in the re-processing issue, they applied for a refund of Rs. 6,88,918, with the Assistant Commissioner rejecting the balance of Rs. 21,51,812, adjusting it towards Cenvat credit reversal demanded in a separate show cause notice. The appellant later succeeded in the show cause notice matter, establishing rectified spirit and Ethyl Alcohol as eligible for Cenvat credit, leading to the setting aside of the interest amount as well.

3. The Tribunal, in a final order dated 25 June 2018, confirmed the eligibility of rectified spirit and Ethyl Alcohol for Cenvat credit, overturning the demand for credit reversal and interest. Consequently, the appellant was entitled to the refund of the balance amount of Rs. 21,51,812 along with interest from the date of adjustment on 11 July 2016. Despite the pendency of an appeal, the Tribunal directed the Revenue to refund the amount with interest till the date of disbursement, allowing the appeal with consequential benefits.

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