Appeal granted for CENVAT Credit on molasses in manufacturing dutiable products

M/s. Trichy Distilleries & Chemicals Ltd. Versus Commissioner of GST & Central Excise, Tiruchirappalli

M/s. Trichy Distilleries & Chemicals Ltd. Versus Commissioner of GST & Central Excise, Tiruchirappalli - TMI Issues involved:
The main issue in this case is whether CENVAT Credit availed on molasses is eligible or not.

Details of the Judgment:

Issue 1: Eligibility of CENVAT Credit on Molasses
The appellant, engaged in the manufacture of Industrial Alcohol and Chemicals, availed CENVAT Credit of the duty paid on inputs, capital goods, and service tax. The appellant did not pay duty on denatured sprit (DNS) used in the manufacture of Acetaldehyde, as it was captively consumed. The department contended that the appellant is not eligible for input Credit on DNS as no duty was paid on it. The appellant availed Credit on molasses, which was consumed in DNS for the manufacture of dutiable products. The department argued that molasses used for non-excisable ENA cannot be treated as inputs. The Tribunal analyzed previous decisions and held that the appellant is eligible for CENVAT Credit as they only availed Credit on inputs used for dutiable products, following the decision in Rajshree Sugar & Chemical Ltd. case.

Issue 2: Interpretation of CENVAT Rules
The department argued that molasses used for ENA, a non-excisable product, cannot be considered as an input for dutiable products like Acetaldehyde. The Commissioner held that the appellant cannot take Credit on molasses used for ENA production, as per CENVAT Credit Rules. However, the Tribunal referred to previous cases and concluded that the appellant's method of availing Credit was valid, as they did not avail Credit on the entire quantity of molasses and only on the portion used for dutiable products.

Separate Judgment by the Tribunal:
The Tribunal referred to the case of Rajshree Sugar & Chemical Ltd., where it was held that after the restructuring of the Central Excise Tariff, denial of CENVAT Credit on molasses used in the manufacture of exempted products like Denatured Ethyl Alcohol cannot be sustained. The Tribunal also cited the case of M/s. Shri Ambika Sugar Ltd. and Commissioner Vs. M/s. Dharani Sugars & Chemicals Ltd., where it was decided that the credit cannot be denied based on similar issues. Following these precedents, the Tribunal allowed the appeal and set aside the impugned order.

In conclusion, the Tribunal allowed the appeal, stating that the appellant is eligible for CENVAT Credit on molasses used in the manufacture of dutiable products, based on the interpretation of CENVAT Rules and previous legal precedents.