2007 (11) TMI 505

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....t the appellants are engaged in the manufacture of dutiable commodities Ordinary Denatured Spirit and exempted commodity Rectified Spirit classifiable under Chapter sub-heading 2204.00 of the First Schedule to the Central Excise Tariff Act, 1985. The appellant availed Cenvat credit on molasses used in the manufacture of dutiable and exempted finished goods. The appellant reversed the credit on molasses used in the manufacture of exempted final product under Rule 6(3)(a) of Cenvat Credit Rules, 2002. But the appellant did not reverse the credit on inputs used in the manufacture of exempted final product, which was lost as mentioned in ER-1 return. Show cause notice was issued proposing demand of duty on this ground. The adjudicating authorit....

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....ion order that the appellants were reversing the credit taken on molasses used in the manufacture of exempted final product, under Rule 6(3) (b) of Cenvat Credit Rules. On scrutiny of the monthly return, it was noticed by the Central Excise Officers that during the period May, 2002 to December, 2002, there is persistent loss of exempted goods i.e. Rectified Spirit and the appellant had neither reversed the credit taken on input molasses nor paid any amount of duty. Therefore, it was proposed in the show cause notice that the appellant are liable to reverse back the full credit on molasses attributable to the manufacture of exempted final product, which were lost. The contention of the appellant is that the exempted final product Rectified S....