Simultaneous Modvat and money credit, plus in-factory ethyl alcohol as input, were held permissible under excise rules.

Distinct credit schemes under the excise rules could be availed simultaneously because the rules, Act and notification contained no express prohibition against combining Modvat credit on molasses with money credit on ethyl alcohol. Ethyl alcohol generated within the factory was also treated as an input for Rule 57K, since the rule did not require the input to be sourced from outside the factory and the product would have attracted duty on removal. On that basis, the duty demand was held unsustainable and credit under both schemes was available.

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Issues: (i) Whether an assessee could simultaneously avail Modvat credit on molasses under Rule 57G and money credit in respect of ethyl alcohol under Rule 57K. (ii) Whether ethyl alcohol emerging in the assessee's factory could be treated as an input for the purposes of Rule 57K.

Issue (i): Whether an assessee could simultaneously avail Modvat credit on molasses under Rule 57G and money credit in respect of ethyl alcohol under Rule 57K.

Analysis: The two schemes operated in different fields and there was nothing in the rules, the Act, or the notification prohibiting simultaneous availment. In the absence of a disabling provision, the assessee was entitled to take benefit of both schemes.

Conclusion: Yes. Simultaneous availment of Modvat credit and money credit was permissible.

Issue (ii): Whether ethyl alcohol emerging in the assessee's factory could be treated as an input for the purposes of Rule 57K.

Analysis: Rule 57K contemplated raw material or finished excisable goods as inputs, and there was nothing in the money credit scheme requiring that the input must necessarily be brought from outside the factory. Since ethyl alcohol emerged in the appellant's factory and would have attracted duty on removal, it could not be said that it was outside the ambit of input for Rule 57K.

Conclusion: Yes. Ethyl alcohol was an input within the meaning of Rule 57K and the credit was validly applied towards duty on the final product.

Final Conclusion: The demand was unsustainable and the assessee was entitled to the benefit of both credits.

Ratio Decidendi: In the absence of any express prohibition, a taxpayer may simultaneously avail distinct statutory credit schemes, and a product emerging within the factory may qualify as an input where the relevant rule does not require it to be sourced externally.

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