TaxTMI 
TaxTMI 
2023 (11) TMI 1163
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....panded its capacity by adding a distillery unit in the same premises. It needs to be pointed out that a by-product of sugar industry is molasses which the sugar factories either sell or, if they have a distillery unit, distill it into alcohol. This alcohol (known as rectified spirit in pure form) can be sold for human consumption in which case it is chargeable to State Excise duty and no central excise duty is chargeable. It can also be denatured (by adding some denaturants) making it unfit for human consumption and sold for industrial use. Denatured alcohol is subject to Central Excise Duty (and not state Excise duty as it is not included in the List II (State List) of the Seventh Schedule of the Constitution). 4. The appellant availed the Capital Goods CENVAT Credit on the capital goods used in setting up the distillery plant during the period of exemption. It also availed CENVAT credit on the input services used in setting up the distillery unit. The undisputed legal position is that if the final products are exempted, no CENVAT credit on the inputs, input services or capital goods can be availed. 5. According to the Revenue, the appellant, having opted for full exemption unde....
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....d. The issue relating to the recognition of distillery unit and sugar unit as separate entities for the purpose of Central Excise and Cenvat Credit Rules requires a fresh consideration. The appellant shall be provided adequate opportunity to submit their side of the case. The Original Authority shall decide the case after taking into account all the legal submissions made by the appellant. 8. The appeal is allowed by way of remand. (emphasis supplied) 7. Thus, the order of this Tribunal in the first round of litigation is that if the unit is one and the same, it is not tenable to say that the appellant can claim benefit of the exemption on some goods and not on others. However, since it was evident from the ER1 Returns that the appellant had paid central excise duty on the denatured alcohol and CO2 manufactured in the distillery unit and cleared during the relevant period, it was not clear as to how such duty was assessed or accepted by the department. Thus, it was felt that there was a contradiction in the order of the adjudicating authority and therefore, the matter was remanded for a fresh adjudication and that is how the impugned order was passed. 8. The operative part of ....
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....n to avail the benefit of the exemption notification no. 50/2003-CE, the appellant had not mentioned the denatured alcohol and CO2 in it and therefore, these two goods were out of the scope of the notification. They were chargeable to excise duty and therefore, CENVAT credit on the capital goods and the input services used in setting up the plant were correctly availed by the appellant. (vi) It had discharged excise duty on the scrap generated in the fabrication of capital goods in the distillery unit and therefore, CENVAT credit on the capital goods must be available to it. (vii) The credit of Rs. 32,82,816/- on input services was sought to be denied as per notification no. 21.2014-CE (NT) which restricted availment of CENVAT credit to six months from the date of invoice. However, this notification came into force only from 1 September 2014 and it is a well settled legal position that it will not apply to invoices issued prior to this date. Reliance is placed on: a) Neon News Pvt. Ltd. Vs CCE &ST Agra [2019(6) GSTL 241 (Tri-All)] b) CCE, Allahabad vs Ram Swarup Electricals Ltd. [2007(217) ELT 12(All)] c) Global Ceramics Pvt. Ltd. vs Principal Commissioner of CE, Delhi I ....
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....viii) None of these other laws nor the permissions / licences/ registrations granted under them by the authorities determine the applicability of the exemption notification to the excisable goods manufactured in the unit. (ix) The impugned order is correct and proper and calls for no interference. It may be upheld and the appeal may be dismissed. 11. We have considered the submissions made by both sides and perused the records of the case. 12. In the first round of litigation, this Tribunal held that it was not tenable to hold that some products can avail area-based exemption and others need not avail area-based exemption. However, since the appellant had, evidently paid duty on the CO2 and denatured alcohol which were manufactured in the distillery unit, it was felt that there was a contradiction in the order and felt that the issue relating to the recognition of distillery unit and sugar unit as separate entities for the purpose of Central Excise and Cenvat Credit Rules requires a fresh consideration and remanded the matter. 13. Thus, the only issue to be decided is insofar as the Central Excise and CENVAT credit is concerned, whether the sugar factory and the distillery uni....
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....an avail area-based exemption and others need not avail area-based exemption. Once the appellant had opted for the area-based exemption notification, it is not open for it to say that it will not avail the benefit for some goods manufactured and will avail the benefit for other goods. Learned counsel for the appellant submitted that it had not mentioned the products of the distillery (denatured alcohol and CO2 in the declaration filed to avail the benefit of the exemption notification. As the exemption notification is not confined to only such products as were mentioned in the declaration but was available to all the goods manufactured in the unit including the new products manufactured after the declaration and those manufactured using newer plants and machinery installed in the unit, the exemption was available to the denatured alcohol and CO2. 17. While remanding the matter, this Tribunal also remarked 'It is not clear as to how such duty payment was accepted/assessed when the revenue contends that the assessee is one license holder and availing the area-based exemption for such license. Learned authorized representative submits that the appellant, like any other assessee, oper....