TaxTMI 
TaxTMI 
1998 (4) TMI 233
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.... 815.10 M.T. of Glacial Acetic Acid was found to have been given wrongly. The demand was equal to short in the credit consequent to its downward revision. 2. Earlier, against the exports, the credit was allowed in respect of un-denatured ethyl alcohol under Heading 2207.10 at the rate of 275%. The Lower Authority now held that the appellants had used denatured alcohol and hence credit should have been allowed under Heading 2207.20 at the rate of 10%. 3. The Lower Authority made this determination on the following grounds :- (a) The Heading 2201.10 covers pure form of ethyl alcohol. This cannot be treated as industrial grade ethyl alcohol. (b) Denatured ethyl alcohol under Heading 2201.20 is unfit for drinking....
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....al acetic acid which is a chemical product, the commercially known raw material is de-natured alcohol. (j) As the export product is covered under chemical group, the input should also have relevance to chemical industry and therefore, it is appropriate to consider the input description to ethyl alcohol as denatured ethyl alcohol of any strength. (k) The clarification given by DGFT vide their letter dated 13-6-1997 is vague, as it clarified that ethyl alcohol is allowed as input as per the norms and not denatured ethyl alcohol and, therefore, credit should be available for ethyl alcohol. This clarification has also failed to note that there is another description by name undenatured ethyl alcohol in the Heading 2207.10 where ....
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....allowed ethyl alcohol as an input, the credit should be available on this item and not on denatured ethyl alcohol. This advice of DGFT should have been considered upon by the lower authority as held by Supreme Court judgment in the case of Oswal Agro Mills against CEGAT's Order dated 5-11-1988 reported in 1989 (41) E.L.T. 104 (Tribunal). They also relied upon the following judgments :- (i) High Court Judgment of Bombay High Court in the case of Richardson Hindustan Limited reported in 1988 (37) E.L.T. 496 (Bom.). (ii) Tribunal judgment in the case of R.N. Rajan & Co., [1995 (77) E.L.T. 600 (Tribunal)]. (iii) Tribunal judgment in the case of Raunaq International Ltd. [1995 (77) E.L.T. 601 (Tribunal)]. (iv) Tribunal judgme....
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....n undertaking the process of denaturing. The process of denaturing, therefore, does not affect the requirements of Pass Book Scheme under Sl. No. 1024. Similarly, no condition of Notification No. 104/95 are contravened just because denatured alcohol has been used as input instead of undenatured ethyl alcohol which is manufactured in the factory of the appellants. 7. The fact that Sl. No. 1240 does not qualify ethyl alcohol to be un-denatured or denatured, would show that the appellants can claim benefit under either of them; they can claim the rate which is most favourable to them. To this extent, I do not find the arguments of the Lower Authority legally tenable. The acceptance of the appellants that they used denatured ethyl alcoh....
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....g disturbed only on account of the pure ethyl alcohol being denatured. In fact, in the Hand Book of Procedures, Vol. II (as on 31-3-1997), Sl. Nos. A-1241 and A-1242 would show that acetic acid can be produced either from ethyl alcohol or from acetaldehyde. Hence, I do not find any substance in the arguments of the Lower Authority, in this regard. 10. I agree with the Lower Authority that the Pass Book Scheme does not allow import of negative list items. However, there is no restriction to availing of credit in respect of any input even though it may appear in the negative list. Hence, the findings of the Lower Authority that :- "allowing credit to a negative list items becomes also questionable" has no legal basis. 11. I do....