CENVAT reversal for captive molasses use supports refund where exemption conditions are otherwise satisfied.

Refund of excise duty on molasses captively consumed for manufacture of rectified spirit and extra neutral alcohol was held admissible where the manufacturer reversed the CENVAT credit attributable to inputs used in producing the intermediate molasses and otherwise satisfied the exemption conditions. The Tribunal applied Rule 6 of the Cenvat Credit Rules, 2004 and followed its earlier rulings on the same factual matrix, holding that the benefit of the exemption notification is not denied merely because the molasses is ultimately used in exempted spirit manufacture. The Revenue's objection that the reversal was insufficient was rejected, and denial of refund was held unsustainable.

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Issues: Whether refund of excise duty paid on molasses used captively for manufacture of rectified spirit and extra neutral alcohol was admissible when the appellant had reversed the credit as required for exempted goods.

Analysis: The dispute turned on the effect of the exemption available for molasses captively consumed in the factory and whether the appellant's reversal of CENVAT credit attributable to inputs used in the manufacture of molasses amounted to compliance with Rule 6 of the Cenvat Credit Rules, 2004. The Tribunal followed its earlier decisions on the same factual and legal matrix and held that, where the manufacturer reverses the credit attributable to the inputs used in the intermediate product and the exemption conditions are otherwise satisfied, the benefit of the notification is not denied merely because the molasses is ultimately used in the manufacture of exempted spirits. The Revenue's objection that the reversal was insufficient did not prevail on the merits.

Conclusion: The refund claim was admissible and the denial of refund was unsustainable.

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