2023 (3) TMI 1207

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....ice tax paid on input services. The appellant was also clearing 'Extra Neutral Alcohol' which is potable and non-excisable. The main input for ENA is molasses which is procured from outside. The appellant vide letter dated 24.11.2009 had informed the Jurisdictional Range Officer that they are planning to produce ENA out of molasses procured from outside and that they are storing it separately and not availing Credit of duty paid on molasses as ENA is non-excisable. A part of ENA (8 to 15%) which was impure was not cleared but denatured.This denatured sprit (DNS) was consumed captivity for the manufacture of Acetaldehyde. Appellant did not pay duty on DNS in terms of notification no. 67/95-CE dated 16.03.1995 as DNS was captively consumed. T....

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....eared and argued for the appellant. The products manufactured and cleared by the appellants are ethyl alcohol, acetaldehyde, acetic acid, etc. The main input is molasses. The appellant did not avail CENVAT Credit on the quantity of molasses used in production of potable ethyl alcohol (ENA) as this product is not dutiable product. This ENA which was not pure, was denatured, and used in further manufacturing process, resulting in dutiable finished products vig: acetaldehyde. The appellant is eligible to avail Credit on inputs used for manufacture of dutiable product. Instead of resorting to keeping separate accounts for the Credit availed on exempted and dutiable products the appellant has calculated the quantity of inputs used for dutiable p....

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....he case of Dharani Sugars [2016 (343) ELT 462 (Tri.-Che.) was also relied. It is submitted that the same was upheld by the Hon'ble Apex Court as reported in 2017(345) ELT A69 (S.C.). The Ld. Consultant prayed that the appeal may be allowed. 5. The Ld. AR Shri R. Rajaraman supported the findings in the impugned order. 6. Heard both sides. 7. The issue to be decided is whether CENVAT Credit availed on the molasses is eligible or not. The department is of the view that molasses is used for manufacture of ENA which is non-excisable and therefore the credit is not eligible. The case of the department is clear from para 48 where the original authority has observed as under: " The contention of the assesse is not correct since a ....

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....nd non excisable. The extra neutral alcohol (ENA) is under the state excise control. Therefore as pre Rule 6 of Cenvat credit rules, 2004, the appellants are not eligible to take credit on the Molasses, which is exclusively used for the manufacture of ENA Hence the question of using Cenvat credit of molasses for the conversion of DNS portion, which is obtained from ENA (non excisable product), does not arise. Hence it is clear that in this case molasses is not an input at all as per CCR 2004, for the manufacture of their final products acetaldehyde and acetic acid. Only DNS, which is excisable used in the manufacture of acetaldehyde and acetic acid and the appellants cannot take credit on the invoices related to the purchase of molasses The....

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....y the Tribunal in the case of Rajshree Sugar & Chemical Ltd. (Supra). "8.1. For the proper appreciation of the case, we take up the facts from Appeal No. E/41188/2014 in the case of Ms. Rajshree Sugars and Chemicals Ltd. v. CCE, Puducherry. The adjudicating authority observed that Denatured Ethyl Alcohol were dutiable and removed from the factory on payment of appropriate Excise duty and the non-excisable goods i.e. varieties of Denatured Ethyl Alcohol including Rectified spirit were removed on payment of an amount equivalent to 6%, on the invoice value in terms of Rule 6 of the Cenvat Credit Rules, 2004. Ethyl Alcohol mainly has an intoxicating agent in alcohol-based liquor for human consumption. Prior to 1-3-2005 of Tariff restru....