2017 (10) TMI 1036

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....eard the parties. 3. The brief facts of the case are that the appellant is having composite mill comprising of Sugar Division and a Distillery Division. They are engaged in the manufacture of V.P. Sugar and Molasses, Rectified Spirit (RS), Special Denatured Spirit (SDS), Ordinary Denatured Spirit (ODS) and Extra Neutral Alcohol (ENA). The show cause notice involves period September, 2007 to August, 2012. The dispute in the show cause notice narrates as under:-  4. They undertake manufacture of Sugar and Molasses in Sugar Mill and Molasses are further utilized in Distillery Division for manufacturer of Ethyl Alcohol through the process of fermentation. They are also availing Cenvat credit on inputs used in manufacture of rectified....

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....d as rectified spirit. So as to make rectified spirit unfit for human consumption, denaturing is done by mixing rectified spirit with certain chemicals. Rectified spirit is nothing but Ethyl Alcohol. They are clearing denatured spirit on payment of duty and on clearance of rectified spirit the appellant was reversing the credit proportionately. They, further, contented that there are no provisions in the CENVAT credit Rules that if a non excisable product emerges in between the manufacture of excisable product in a continuous process, CENVAT credit is inadmissible. They have also contended that rectified spirit is finding place at Tariff Item No.22072000 because Ethyl Alcohol and rectified spirit are not two different commodities. The origi....

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....the appellant have a composite unit where sugar and molasses are manufactured. Further the Molasses on fermentation in the distillery, Ethyl Alcohol is obtained. Ethyl Alcohol is denatured by mixing certain chemicals which make Ethyl Alcohol unfit for human consumption. Before 01.03.2005 chapter Sub heading 2204.10 covered denatured ethyl alcohol of any strength and chapter Sub heading no.2204.90 covered Ethyl Alcohol except alcoholic liquor for human consumption and undenatured ethyl alcohol. From 01.03.2005 Tariff Item No.22072000 covered ethyl alcohol and other spirits denatured of any strength. This led the Central Excise authorities to think that pre-denatured ethyl alcohol does not find placed in Central Excise Tariff. We find that th....