Custom, Excise & Service Tax Tribunal
Rajshree Sugars And Chemicals Ltd vs Pondicherry on 19 July, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Excise Appeal No.40267 and 40268 of 2015
(Arising out of Order-in-Original No. 61 & 62/2014 (C) dated 31.10.2014 passed by
the Commissioner of Central Excise, Puducherry)
M/s. Rajshree Sugars & Chemicals Ltd. - Unit III Appellant
Semmedu Village, Gingee Taluk
Villupuram - 604 153.
Vs.
Commissioner of GST & Central Excise Respondent
No. 1, Goubert Avenue
Puducherry - 605 001.
APPEARANCE:
Shri M.N. Bharathi, Advocate for the Appellant
Shri M. Ambe, Authorized Representative for the Respondent
CORAM
Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial)
Hon'ble Shri M. Ajit Kumar, Member (Technical)
Final Order Nos.40912 & 40913/2024
Date of Hearing : 19.07.2024
Date of Decision: 19.07.2024
Per Ms. Sulekha Beevi,
Brief facts are that the appellant is engaged in manufacture of
final products of sugar as well as intermediate products of molasses.
They also have a electricity generation plant. The appellant is
registered with the Central Excise Department. They were availing the
facility of CENVAT credit on inputs, capital goods and also service tax
paid on input services. During the financial year 2008 - 09, the
appellant started producing sugar and molasses in their sugar plant
and electricity in their co-generation plant. Their distillery plant has
started producing Ethyl Alcohol in the form of Rectified Spirit, Extra
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Neutral 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 other
undenatured spirit and also to demand duty in respect of molasses
which was manufactured as an intermediate product and captively
consumed for manufacture of finished products (rectified spirit etc.).
The Show Cause Notice proposed to disallow the credit, recover the
same along with interest and also for imposing penalties. The notice
also proposed to demand duty on molasses manufactured and
captively consumed. After due process of law, the adjudicating
authority disallowed the credit on molasses, confirmed the duty on
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molasses along with interest and imposed penalties. Aggrieved by the
said order, the appellant is now before the Tribunal.
2. The learned counsel Shri M.N. Bharathi appeared and argued on
behalf of the appellant. He submitted that the issue as to whether
rectified spirit and undenatured alcohol are 'excisable' goods has been
settled by the decision of the Hon'ble Supreme Court in the case of CCE
Vs. Dharani Sugars & Chemicals Ltd. reported in 2022 (379) ELT 556
(SC). The Tribunal in the case of Dharani Sugars & Chemicals Ltd. Vs.
CGST & Central Excise vide Final Order No. 40560 of 2024 dated
27.5.2024 had considered the very same and after following the above
judgment of the Hon'ble Supreme Court, set aside the demand raised
by the department. So also in the case of EID Parry India Ltd. Vs. CGST
& Central Excise vide Final Order No. 40464/2024 dated 25.4.2024,
the Tribunal set aside the demand on the very same issue. He prayed
that the appeals may be allowed.
3. The learned AR Shri M. Ambe appeared and argued for the
department. The findings in the impugned order were reiterated.
4. Heard both sides.
5. The first issue for consideration is whether the disallowance of
credit on molasses used for manufacture of rectified spirit and
undenatured alcohol is eligible or not. The second issue for
consideration is whether the appellant is eligible to avail the exemption
under Notification No. 67/1995 on the molasses manufactured and
captively consumed for manufacture of rectified spirit, undenatured
alcohol.
6. The reason for denying the credit as well as the eligibility of
exemption notification No. 67/95 is that the finished products rectified
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spirit, undenatured alcohol are non-excisable goods and that these
cannot be treated as exempted goods as contended by the appellant.
This issue stands covered by the judgment of the 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 Order dated 27.5.2024 has considered the issue in detail. The
view of the department as to whether rectified spirit and undenatured
alcohol are not non-excisable has been considered by the Tribunal in
detail. The relevant paragraph reads as under:-
"12. The issue to be decided is whether appellant is eligible for the
benefit of Notification No.67/95-CE dated 16.03.1995 and also whether
the credit availed on inputs/input services / capital goods are eligible.
13. The very same issues were considered in the appellant's own
case. The findings of the Tribunal in Final Order No.40789-40799/2014
dated 20.11.2014 reads as under:-
8.1 For the proper appreciation of the case, we take up the facts from
Appeal No. E/41188/2014 in the case of M/s. Rajshree Sugars and
Chemicals Ltd. Vs. 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
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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 restructuring from 6 digit
to 8 digit Heading No. 2204.90 of the CETA covers Rectified Spirit and
ENA, NIL rate of duty. The appellants were eligible to avail the CENVAT
credit on the molasses captively used in the manufacture of dutiable and
exempted products. The appellants reversed the amount under Rule 6
of the CENVAT Credit Rules, 2004 at the time of clearance of the
exempted Denatured Ethyl Alcohol including Rectified spirit. According
to Revenue, after restructuring of the Tariff from 6 digit to 8 digit,
Denatured Ethyl Alcohol would become non-excisable and therefore the
appellants are not eligible to avail the benefit of the exemption
Notification No. 67/95-CE (supra) in respect of molasses used in the
manufacture of Denatured Ethyl Alcohol including Rectified spirit.
8.2 It is appropriate to look into the changes of Chapter 22 and the
Notification as under:-
(I) As on 1st March, 1994, Chapter 22 covers beverages, vinegar
and spirit. Note to Chapter 22 states that this Chapter does not
cover alcoholic liquors for human consumption. The Tariff
description of Heading No. 22.04 is reproduced below:-
Heading Sub- Description of goods
No. heading
(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 Sub- Description of goods
No. heading
(1) (2) (3)
22.04 Ethyl Alcohol of any
strength whether
2204.10 denatured or not, but
2204.90 not including alcoholic
liquor for human
consumption
-Denatured ethyl
alcohol of any strength
- Other NIL
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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 from
1.3.2005, Note 4 of Chapter 22 states that "this Chapter does not cover
alcoholic liquor for human consumption". Heading No. 2204 is shown as
blank. Heading 2207 covers "ethyl alcohol and other spirits, denatured
of any strength". The relevant portion of Heading 2207 is reproduced
below:-
Heading Description of goods Rate
No. of
Duty
(1) (3) (4)
2207 Ethyl Alcohol and other spirits,
denatured of any strength
2207 10 ---
2207 10 11 ---
2207 10 19 ---
2207 10 90 ---
2207 20 00 - Ethyl Alcohol and other spirits, 12%
denatured of any strength
(IV) Notification No. 3/2005-CE dated 24.2.2005 (Serial No. 14 of the
Table) "all spirits (other than denatured ethyl alcohol of any strength)"
under sub-heading No. 2207 20 00 extended nil rate of duty.
(V) Notification No. 3/2005-CE dated 24.2.2005 was superseded by
Notification No. 12/2012-CE dated 17.3.2012. Sl. No. 40 of the Table
appended to Notification No. 12/2012 "all spirits (other than denatured
ethyl alcohol of any strength)" under sub-heading 2207 20 00, extended
nil rate of duty.
(VI) In the present case, the Issue Involved is eligibility of Notification
No. 67/95-CE (supra), which is as under:-
"In exercise of the powers conferred by sub-section (1) of section 5A of
the Central Excise Act, 1944 (1 of 1994) read with sub-section (3) of
section3 of the Additional Duties of Excise (Goods of Special
Importance) Act, 1957 (58 of 1957), (hereinafter referred to as the said
Special Importance Act), the Central Government, being satisfied that it
is necessary in the public interest so to do, hereby exempts -
(i) capital goods as defined in the CENVAT Credit Rules, 2002
manufactured in a factory and used within the factory of production;
(ii) goods specified in column (1) of the Table hereto annexed
(hereinafter referred to as 'inputs') manufactured in a factory and used
within the factory of production in or in relation to the manufacture of final
products specified in column (2) of the said Table;
From the whole of the duty of excise leviable thereon which is specified
in the Schedules to the Central Excise Tariff Act, 1985 (5 of 1986) or
additional duty of excise leviable thereon, which is specified in the
Schedule to the said Special Importance Act. Provided that nothing
contained in this notification shall apply to inputs used in or in relation to
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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 All goods falling
Schedule to the Central Excise Tariff under the First
Act 1985 (5 of 1986) other than (light Schedule to the
diesel oil, high speed diesel oil) and Central Excise Tariff
motor spirit, commonly known as Act 1985 ( 5 of 1986),
petrol. 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 Digit, clarified as under:-
"Implementation of the Central Excise Tariff (Amendment) Act, 2004 (8- Digit Classification Code)- Clarification regarding.
I am directed to draw your attention to this Department's Notification No.6/2005-CE (NT) dated 24.2.2005, Issued from F.No.4/3/2002-CX.I (Part-II), which notifies that the Central Excise Tariff (Amendment) Act, 2004 will come into force with effect from 28th February 2005. The said Act is being uploaded on the CBEC website, (www.cbec.gov.in).
2. Accordingly, all the field officers must ensure implementation of the amended Tariff Act (including 8-digit classification code in It's new 1 & 2nd Schedules) from 28.02.2005. Trade should also be sultably informed Immediately and guided in the matter so that the transition from 6-digit to 8-digit classification code is smooth without any difficulty to the trade in day-to-day clearances.
3. Notification No. 3/2005-CE dated 24th February 2005 has been Issued to preserve the existing duty rates on specified commodities where effective rates were built into the six-digit tariff, but are now subject to different tariff rates in the 8-digit code. This is subject to any subsequent changes.8
E/40267 & 40268/2015 8.4 In the present case, there is no dispute that prior to 28.2.2005, Rectified Spirit and ENA manufactured by the appellant were covered under sub-heading No. 2204.90, NIL rate of duty. After amendment of Tariff (8 Digit Classification Code), Heading 22.04 would correspond to Heading No. 22.07. In the above Board Circular, it has been clarified that Notification No. 3/2005-CE dated 24.2.2005 was issued to preserve the existing duty rate. So, it is clearly evident that the Rectified Spirit existing NIL rate of duty under Sub-heading No. 2204.90 has been covered under Serial No. 14 of the Table appended to Notification 3/2005-CE (supra). In view of the above Board Circular, we find merit in the submission of the learned Advocate that with effect from 28.2.2005, Rectified Spirit and ENA are exempted goods, covered under Notification No.3/2005-CE. The Hon'ble Allahabad High Court in the case of Gularia Chini Mills Vs. Union of India 2014 (34) STR 175 (All.) while dealing with bagasse, which emerged as a residue of sugarcane used as fuel in factory for manufacture of final product would be treated as exempted goods in the context of restructuring 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 Chapter, heading or sub-heading of the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as the case may be, relating to any goods or class of goods, wherever referred to in the said rules or notifications, the corresponding reference to the Chapter, heading or sub-heading or tariff item, of the First Schedule or the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), as amended by the Central Excise Tariff (Amendment) Act, 2004 (5 of 2005) shall be deemed to have been substituted.
No. 4/3/2002-CX.1 (Pt.II) Abhay Kumar Srivastav Deputy Secretary to the Government of India Note: This notification intends to take 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).
9E/40267 & 40268/2015 These amendments do not Involve any substantive changes in the existing rules, so the particulars of each rule have not been indicated."
Furthermore, during debate in Lok Sabha on the said Central Excise Tariff (Amendment) Bill, 2004, the then Hon'ble Minister of Finance in regard to the purpose of Introduction of eight-digit classification has stated that "the purpose of the Bill is very limited. On the custom side, we already have an eight-digit classification. It is, therefore, necessary that on the Excise side also we have the same eight-digit classification. What we have found is that eight-digit classification helps both trade and revenue department to Identify a particular product and heading under which it falls. Immediately, the number of disputes comes down very sharply....".
31. A perusal of the 'Note' appended below the Notification dated 24-2- 2005 as well as the statement made by the Hon'ble Finance Minister in Parliament, as referred to above, clearly establishes that the notification has taken care of the technical changes adopted in the numbering scheme of 6 digits Central Excise classification, which has been aligned with the Customs Tariff of 8 digits with effect from 28-2- 2005.
32. The definition of 'excisable goods' given in Section 2(d) means the goods, which are specified in the First or Second Schedule and which are subjected to duty of excise, can only be treated as excisable goods. A proposition has also been accepted by 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 changes of Chapter 22 as mentioned above, it is clear that Chapter 22 does not cover alcoholic liquor for human consumption. Department accepted that prior to 1.3.2005, Rectified spirit was nil rate of duty under sub-heading No. 2204.90. After the introduction of 8 digit classification with effect from 1.3.2005, Heading 2207 covers ethyl alcohol and other spirits, denature, of any strength. On perusal of the impugned order, we find that the appellant contended before the Adjudicating authority that Rectified Spirit with 95% strength was removed from the factory. It cannot be alcoholic liquor for human consumption. Both Rectified Spirit and Denatured Ethyl Alcohol are only varieties of Ethyl Alcohol As per Dictionary meaning, Rectified Spirit is distilled Ethanol with only 4.43% water and it is nothing but Ethyl Alcohol with highly concentrate Ethanol and cannot be fit for 10 E/40267 & 40268/2015 human consumption. Normally, Ethyl Alcohol are ranging from 10% to 40% in liquor. In any event, Rectified Spirit (95))s more akin to denatured Ethyl Alcohol and both are industrial alcohol falling under Heading No. 2207 of HSN. In this perspective, if we look into Notification No. 3/2005- CE (supra), as claimed by the appellants, the words "all spirits" in Serial No. 14 of the Table of the said Notification have wide amplitude and it includes irrespective of "whether denatured or not". So, we are of the view that Rectified Spirit and ENA are covered by exemption Notification.
8.6 The Tribunal in the case of Ugar Sugar Works Vs. CCE 2007 (214) ELT 33 held that with effect from 1.3.2005, Rectified spirit along with denatured spirit would cover under sub-heading No. 2207 2000 and it cannot be said that with effect from 1.3.2005, it became non-excisable. The relevant portion of the said decision is reproduced below:-
"4. The appellant manufactures Sugar and Molasses. From the molasses, Rectified spirit is produced. Rectified spirit Is denatured and de-natured spirit is also manufactured. The appellant takes Cenvat credit on the molasses used in the manufacture of Rectified Spirit/Denatured Spirit. It is the contention of the Revenue that w.e.f. 1- 3-2005, Rectified Spirit has become non-excisable and, therefore, no Cenvat credit could have been availed by the appellant. Apart from molasses, furnace oil is also used in the manufacture of Rectified Spirit as a fuel. Therefore, Revenue 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 Spirit is reversed, there Is no violation of any provisions of law and the credit taken on Molasses cannot be denied. This issue is covered by the decision of this Bench In the case of NCS Distilleries/Estates Pvt. Ltd. v. CCE, Visakhapatnam 2007 (207) E.L.T. 400 (Tri.- Bang.) and the Final Order Nos. 56 to 59/2007 dated 30-11- 2006 [2007 (212) E.L.T. 234 (Tribunal)) in the case of The Godavari Sugar Mills Ltd. & Others v. CCE. It is on record that the appellants had reversed total Cenvat credit of Rs. 1,22,49,550/- attributable to the molasses used in or in relation to the manufacture of 3073155 Itrs. of Rectified Spirit cleared without payment of duty."
8.7 In the case of CCE Vs. M/s Bazpur Cooperative Sugar Factory Ltd. 2014-TIOL-1733-HC-UKHAD, the Hon'ble Uttarkhad High Court held that Rectified spirit attracting nil rate of duty and waste/storage loss of Rectified Spirit, credit availed on duty paid on molasses is required to be reversed under Rule 6(1) of the CENVAT Credit Rules, 2004. In that 11 E/40267 & 40268/2015 case, while scrutinizing the return of the assessee for the month from July 2005 to March 2006, it was observed that the stock was short by 33172.80 bulk litres. It was shown as wastage. The Hon'ble High Court in favour of the Revenue held that CENVAT credit attributable to the quantity of inputs (molasses) used in or in relation to the manufacture of the exempted final products (Rectified spirit), attracting nil rate of duty and which was reported as wastage/storage loss should be reversed as per provisions of Rule 6(3) of the CENVAT Credit Rules, 2004. In the case of Godavari Sugar Mills Ltd. Vs. CCE 2007 (212) ELT 234 it was held that molasses used for manufacture of Rectified spirit and denatured spirit, part of Rectified spirit converted into denatured spirit which is dutiable, benefit of Notification No. 67/95-CE is available provided the manufacturer discharges the obligation prescribed under Rule 6 of the CENVAT Credit Rules. In that case, it was observed that the Rectified spirit covers under Heading No.22.04 of the Tariff (presently 2207 2000).
8.8 The adjudicating authority observed that Section 2(d) of the Central Excise Act, 1944 defines excisable goods to refer only to those goods being leviable to central excise duty, denatured ethyl alcohol virtually changed into non-excisable goods since 1.3.2005. It has been observed that Note 4 of Chapter22 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 8 digit, we find that the position of sub-heading 2204.20 nil rate of duty is corresponding to Notification No. 3/2005. We have also noticed that the appellants discharged the obligation under Rule 6 of the CENVAT Credit Rules by paying 6% of the invoice value on the clearance of the Rectified spirit. Thus, the appellants are eligible to avail the benefit of Notification No. 67/95-CE dated 16.3.1995 in respect of molasses used in the manufacture of Rectified spirit and ENA.
14. The above decision of the Tribunal has been affirmed and upheld by the Hon'ble Apex Court as reported in Commissioner of CE & ST versus Dharani Sugars & Chemicals Ltd., 2022 (379) ELT 556 (S.C.)
15. The Tribunal in the case of EID Parry India Limited (supra) by Final Order No.40464/2024 dated 25.04.2024 has applied the very same decision and held that the demand cannot sustain.
16. After appreciating the facts and following the above decisions, we are of the considered opinion that the demand, interest and penalties 12 E/40267 & 40268/2015 cannot sustain. The impugned order is set aside. The appeal is allowed with consequential relief if any."
8. The very same was taken by the Tribunal in the case of EID Parry India Ltd. vide Final Order dated 25.4.2024.
9. We do not find any ground to take a different view since the issue and facts are identical. After appreciating the facts and following the decisions above, we are of the considered opinion that the demand cannot sustain. The impugned orders are set aside. The appeals are allowed with consequential relief, if any, as per law.
(Dictated and pronounced in open court)
(M. AJIT KUMAR) (SULEKHA BEEVI C.S.)
Member (Technical) Member (Judicial)
Rex