At, Customs Excise Service Tax Appellate Tribunal Regional Bench, Allahabad
By, THE HONORABLE JUSTICE: ASHOK JINDAL
By, MEMBER AND THE HONORABLE JUSTICE: ANIL G. SHAKKARWAR
For Petitioner: Dushyant Kumar, Consultant And For Respondents: Mohd. Altaf, Asstt. Commr. (A.R.)
1. The appellant has filed miscellaneous applications for early hearing of the appeals on the ground that the issue has already been decided and issue is recurring in nature. Therefore, we allow the early hearing of the appeals and as the facts involved in both the appeals are identical, therefore both are taken up together for disposal today itself as agreed by both the sides.
2. The brief facts of the case are that the appellant are having composite unit comprising of sugar mill and distillery division. They are engaged in the manufacture of Sugar and molasses, ethyl alcohol, rectified spirit and Denatured Absolute Alcohol. 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. The contention of revenue is that with effect from 01.03.2005 Central Excise Tariff item No. 22072000 covers ethyl alcohol and other spirit Denatured of any strength. Therefore, the product known as rectified spirit does not exists in Central Excise Tariff and on fermentation of molasses rectified spirit comes into existence which does not find place in Central Excise Tariff. Therefore, though from said rectified spirit denatured spirit is manufactured on which duty of excise is paid the CENVAT credit gets snapped by coming into existence of product not finding place in Central Excise Tariff. Therefore, CENVAT credit on inputs and capital goods and input services going into manufacturer denatured spirit are not available to the appellants.
3. The show cause notices were issued to the appellant to deny Cenvat Credit which has been gone in manufacture of the de-natured Spirits. Consequently, the duty was demanded along with interest and penalty on the appellants were imposed. Against the said orders, the appellants are before us.
4. Heard the parties.
5. Considering the fact that identical issue came up before this tribunal in the case of Bajaj Hindustan Sugar Ltd. wherein vide final Order No. 70392/2016 dated 26.05.2016, this Tribunal observed as under:-
6. We have taken the rival contentions into consideration and also have gone through the case records and paper books submitted during the hearing. We find that the appellant have a composite unit where sugar and molasses are manufactured. Further the molasses on fermentation in the distillery ethyl alcohol is obtain. 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 the show cause notice contents that rectified spirit is manufactured in between the process to manufacture denatured spirit and rectified spirit does not find place in Central Excise Tariff with effect from 01.03.2005 and therefore CENVAT credit is not admissible as inputs & input services and capital goods going into manufacture of rectified spirit and hence going into manufacture of denatured spirit. Before 01.03.2005, department accepted that rectified spirit is covered under chapter sub heading No. 2204.90. As stated above, 2204.90 covers ethyl alcohol except one for human consumption and which are undenatured. Therefore, the issue to be decided is whether ethyl alcohol and rectified spirit are two different commodities or one and the same commodity. We find that the Hon'ble Supreme Court in the case of State of Uttar Pradesh and others (supra) in para 9 has observed as follows:-
The ISI specifications had divided ethyl alcohol into several kinds of alcohol. Beverages and industrial alcohols were clearly and differently treated. Rectified spirit for industrial process was defined as spirit purified by distillation having a strength of not less than 95% by volume of ethyl alcohol.
It is very clear from the observation of Hon'ble Supreme Court that ethyl alcohol and rectification spirit are one and the same. We, therefore, hold that rectified spirit which is not used for human consumption is nothing but ethyl alcohol and is finding place in tariff item No. 22072000. We, therefore, hold that the show cause notice dated 14
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.08.2013 is not sustainable. As a result, we set aside the impugned order and allow the appeal with consequential relief. No Costs. 6. As the issue has already been decided by this Tribunal where Cenvat credit cannot be denied to the appellant on inputs/input services used in manufacturing of sugar and molasses, wherein de-natured Spirits emerges, therefore, we set aside the impugned orders and allow the appeals with consequential relief. (Dictated and pronounced in the court.)