TaxTMI 
TaxTMI 
2024 (7) TMI 1310
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....l Alcohol and Neutral Alcohol from April 2012 onwards. They manufactured denatured Ethyl Alcohol from July 2012 onwards. The Denatured Ethyl Alcohol manufactured in their distillery plant which is classifiable under Chapter Sub-Heading 22072000 is removed by the appellant on payment of duty. The department was of the view that undenatured ethyl alcohol in the form of rectified spirit, extra neutral alcohol and neutral alcohol etc. which is also manufactured in the distillery are not specified in the First Schedule to the Central Excise Tariff Act, 1985 as 'excisable' goods. The appellant had availed CENVAT credit on molasses purchased from outside and used in the manufacture of sugar. According to department the appellant is not eligible to avail credit of the duty of molasses as well as not eligible for exemption of Notification No. 67/1995-CE dated 16.3.1995 on molasses used for captive consumption. As per the said notification, only if the goods are 'excisable', the benefit of exemption would be eligible. Show Cause Notice dated 16.4.2014 and 25.7.2014 were issued to the appellant proposing to disallow the credit availed on molasses used for manufacture of rectified spirit and o....
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....e Hon'ble Supreme Court as reported in 2022 (379) ELT 556 (SC). The relevant paragraph reads as under:- "1. We do not find any merit in the present appeal, as the respondent/assessee has enjoyed the benefit of the exemption Notification No. 67/95-C.E., dated 16-3-1995 till financial year 2005-06. The appellant-Revenue has predicated their case on the addition of the item "other" in Heading No. 22.04 made vide sub-heading 2204.90 with effect from 1-3-2005. In our opinion the aforesaid addition is not a substantive change or modification. In fact, the Tribunal has pointed out and it is accepted that the changes were made pursuant to adoption and re-structuring of tariff from six digit to eight digit. The changes made were not with the intend to withdraw the existing benefits or to withdraw an exemption which had been given and had been enjoyed by the respondent/assessee for the last twenty years. 2. Recording the aforesaid, the appeal stands dismissed. C.A. Nos. 14628/2015, 13469/2015 & 9088/2018 3. In view of order passed in C.A. No. 8915/2015, these appeals stand dismissed." 7. The Tribunal in the case of Dharani Sugars & Chemicals Ltd. vide Final ....
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....e Tariff description of Heading No. 22.04 is reproduced below : - Heading No. Sub-heading Description of goods (1) (2) (3) 22.04 2204.00 Ethyl Alcohol of any strength whether denatured or not, but not including alcoholic liquor for human consumption Rectified Spirit and ENA are not fit for human consumption and covered by exemption Notification No. 2/94-CE dated 1.3.1994 (Sl. No. 32 of the Table) exempted all goods, other than Ethyl Alcohol of any strength, denatured under sub-heading 2204.00 nil rate of duty. (II) Prior to 1.3.2005, Note 1 of Chapter 22 provides that "this Chapter does not cover alcoholic liquors for human consumption". The relevant portion of Heading No. 22.04 is reproduced below : - Heading No. Sub-heading Description of goods (1) (2) (3) 22.04 2204.10 2204.90 Ethyl Alcohol of any strength whether denatured or not, but not including alcoholic liquor for human consumption -Denatured ethyl alcohol of any strength - Other NIL Rectified Spirit and ENA covered under Sub-heading No. 2204.90, NIL duty. (III) After re-structuring of Tariff from 6 digit to 8 digit, with effect....
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....rovided that nothing contained in this notification shall apply to inputs used in or in relation to the manufacture of final products which are exempt from the whole of the duty of excise or additional duty of excise leviable thereon or are chargeable to nil rate of duty, other than those goods which are cleared - (i) xxxx xxxxx xxxxx xxxxx (ii) xxxx xxxxx xxxxx xxxxx (vi) by a manufacturer of dutiable and exempted final products, after discharging the obligation prescribed in rule 6 of the CENVAT Credit Rules, 2001. Explanation ************ TABLE Description of Inputs Description of final products (1) (2) All goods falling under the First Schedule to the Central Excise Tariff Act 1985 (5 of 1986) other than (light diesel oil, high speed diesel oil) and motor spirit, commonly known as petrol. All goods falling under the First Schedule to the Central Excise Tariff Act 1985 ( 5 of 1986), other than matches. 8.3 We find that the present dispute is emerged due to restructuring of the Tariff from 6 digit to 8 digit. CBEC vide Circular No. 808/5/2005-CX dated 25.2.2005 regarding implementation of Tariff from 6 Digit to 8 D....
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....ructuring of Tariff of 6 digit to 8 digit, observed as under:- "30. It is relevant to mention here that a notification, bearing No. 7/2005-Central Excise (N.T.) was published in Part II, Section 3, sub-section (1) of the Gazette of India, Extraordinary, dated 24-2-2005, which reads as under: "In exercise of the powers conferred by Section 37 of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules to amend all the rules made under the said section and all the notifications Issued under the said rules and for the time being in force on the date of commencement of the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005), except as respects things done or omitted to be done before such amendments, namely:- 1.(1) These rules may be called the Central Excise Removal of Difficulties) Rules, 2005 (2) They shall come into force on the date of the commencement of the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005). 2. In each of the rules made under Section 37 of the Central Excise Act, 1944 (1 of 1944), and in each of the notifications issued under these rules, for any reference to the Chapt....
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....y the Commissioner in its findings. A perusal of Section 2(d) of Central Excise Act shows that the excisable goods are only those goods which are subjected to duty of excise as specified in the First Schedule or Second Schedule of the Central Excise Tariff Act. Since Column of rate of duty is blank, therefore, in view of Section 2 of the Central Excise Tariff Act, 1985, electrical energy is not being subjected to excise duty for the purposes of being excisable goods under Section 2(d) of the Central Excise Act. Furthermore, Rule 6 of the 2004 Rules, which is applicable only to excisable goods, can alone be treated as exempted goods for the purposes of Rule 6(3) of 2004 Rules, does not apply to electrical energy." 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 scheme for central excise classification through the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005). From the Legislative chan....
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.... 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 Spirit. Hence, in terms of Rule 6 of Cenvat Credit Rules, if the credit on molasses used in or in relation to the manufacture of the said Rectified Spiri....
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....te 4 of Chapter 22 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 spirits" has a wide meaning, irrespective of whether denatured or not. Taking into account of restructuring of the Tariff from 6 digit to....