Captive consumption exemption for molasses used in alcohol manufacture upheld; refund denial failed because final product was treated as non-excisable.

Molasses captively consumed in the manufacture of rectified spirit or ethyl alcohol was treated as eligible for exemption under Notification No. 67/95-CE. The Tribunal applied its earlier decision in the assessee's own case and the cited line of authority to hold that rectified spirit and ethyl alcohol were not to be treated as distinct commodities for this exemption dispute. On that basis, the benefit of exemption could not be denied merely because the final product was said to be non-excisable or outside the central excise levy. The refund denial was therefore not sustained, and the impugned order was set aside with consequential relief.

---

---

Issues: Whether molasses captively consumed in the manufacture of rectified spirit or ethyl alcohol was entitled to exemption under Notification No. 67/95-CE, and whether the refund claim could be denied on the ground that the final product was non-excisable or outside the central excise levy.

Analysis: The Tribunal followed its earlier decision in the assessee's own case and the principle applied in the cited line of authority that rectified spirit and ethyl alcohol are not to be treated as distinct commodities for the purpose of the exemption dispute. On that approach, molasses used captively in the manufacture of alcohol-based products did not lose the benefit of the exemption merely because the final product was treated as outside central excise duty or not subjected to duty in the manner urged by the department. The issue was therefore no longer res integra.

Conclusion: The exemption under Notification No. 67/95-CE was held available and the denial of refund was not sustained.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: Where molasses is captively consumed in the manufacture of rectified spirit or ethyl alcohol, the exemption cannot be denied merely on the ground that the resulting product is not subjected to central excise duty in the manner contended by the revenue.

---