TaxTMI 
TaxTMI 
2017 (10) TMI 644
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.... input (Molasses), and were not maintaining separate accounts, they were required to pay 5% of the value of exempted goods in terms of Rule 6(3) of Cenvat Credit Rules, 2004. The appellants followed the said procedure and discharged the payment as mandated by the said Rule. The Department is of the view that the Ethyl alcohol/ Rectified Spirit cleared by the appellant is a non-excisable item and hence, the credit availed on molasses attributable to such Ethyl alcohol is not legally sustainable. Accordingly, proceedings were initiated against the appellant for denial of cenvat credit on Molasses consumed in the manufacture of Ethyl alcohol/ Rectified Spirit/ Absolute Alcohol. The original authority held that only denatured Ethyl alcohol is covered under Central Excise Tariff Heading 2207 2000. The exemption under Notification 3/2005-CE dated 24.02.2005 is applicable only to excisable goods namely, denatured Ethyl alcohol and not to non-excisable goods (Ethyl alcohol). As the goods are not mentioned in tariff, the same should be considered as non-excisable goods. Accordingly, the appellant is not covered by the Cenvat Credit Scheme in respect of such production of non-excisable goods....
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....he Revenue that the said product is not at all covered for Central Excise levy and hence, the Cenvat Credit Scheme itself is not available to the appellant. In this connection, we note that similar matter came up for discussion by the Tribunal in bunch of cases in Rajshree Sugars (supra). In those appeals, the Tribunal has examined similar set of facts for application of Notification 3/2005-CE with reference to Rectified Spirit manufactured by the appellant. In those appeals also the Revenue canvassed a view that rectified spirit and extra neutral alcohol are non-excisable goods w.e.f. 01.03.2005, and therefore, the appellants are not eligible to avail the benefit of exemption Notification 67/1995-CE on the molasses captively used in the manufacture of the said goods. After detailed examination of various points raised, the Tribunal observed as below:- 8.5 It is clear from the decision of the Hon'ble Allahabad High Court in the case of Gularia Chini Mills (supra), that the restructuring of Tariff from 6 digit to 8 digit with effect from 1.3.2005 would not involve any substantive change in the existing rules. It was taken care of the technical changes adopted in the numbering sche....
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....have been availed by the appellant. Apart from molasses, furnace oil is also used in the manufacture of Rectified Spirit as a fuel. Therefore, Revenue is also aggrieved that the Cenvat credit availed on furnace oil is also not admissible. The appellant has contended that prior to 1-3-2005, Rectified Spirit was covered under Chapter sub-heading 2204.90 and Denatured Spirit was covered under CSH 2204.10. However, in the restructured Tariff, both Rectified Spirit and Denatured Spirit are covered under the same Chapter sub-heading 2207 20 00. Therefore, the contention that Rectified Spirit has become non-excisable w.e.f. 1-3-2005 is totally wrong. We find that even though the molasses is first converted to Rectified Spirit, while converting the same, Carbon Di-Oxide is first manufactured and the same is cleared on payment of duty. Further, part of the Rectified Spirit is converted into Denatured Spirit which is also sold on payment of duty. Therefore, it cannot be said that Molasses is used only in the manufacture of Rectified Spirit. In other words, Molasses is used as a common input in the manufacture of exempted Rectified Spirit as well as dutiable Carbon Di-Oxide and Denatured Spir....
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....ral excise duty, denatured ethyl alcohol virtually changed into non-excisable goods since 1.3.2005. It has been observed that Note 4 of Chapter22 of the Tariff excludes liquor for human consumption. Rectified spirit and other varieties of denatured ethyl alcohol being only undiluted form of liquor for human consumption and usable for potable purposes are certainly excluded from the purview of Chapter 22 thereby do not remain as excisable goods. We find that in the present case, the stand taken by the Revenue that prior to 1.3.2005, Rectified spirit was not for human consumption and therefore it was classified under heading 2204 as nil rate of duty. So, after 1.3.2005, it cannot be said that it is fit for human consumption. It is further observed that the exemption Notification No. 3/2005-CE would be extendable only to Heading No. 2207 2000 'denatured ethyl alcohol and other denatured spirits, of any strength'. It has also observed that though the notification refers to all spirits would be read with reference to sub-heading No. 2207 2000. In our considered view, exemption Notification would be read independently. We have already discussed above that the expression all spiritshas a ....