Customs, Excise and Gold Tribunal - Bangalore
The Ugar Sugar Works Ltd., Shri ... vs The Commissioner Of Central Excise on 26 November, 2007
Equivalent citations: 2008(127)ECC39, 2008(153)ECR39(TRI.-BANGALORE)
ORDER S.L. Peeran, Member (J)
1. Both these appeals raises common question in law and facts, hence they are taken up together for disposal as per law.
2. Appeal No. E/134/2007 arises from Order-in-Original No. 18/2006 dated 12.12.2006 by which the Commissioner of Central Excise, Belgaum has confirmed demands by denying the cenvat credit availed by the assessee on 'in-house' manufactured Molasses during the period from 1.7.2005 to 31.3.2006. He has also imposed penalty. Appellants in Appeal No. E/146/2007 have like-wise challenged the Order-in-Original No. 3/2007 dated 14.2.2007 confirming demands by denying the cenvat credit availed by the assessee of duty paid on 'in-house' manufacture Molasses during the period 1.10.2005 to 31.3.2006. He has also imposed penalty. There is also demand in respect of denatured spirit cleared during the said period. Appellants contention is that this very issue was decided in the case of Shri Hiranyakeshi Sahakari Sakkare Karkhana Niyamit v. CCE, Belagum by Final Order No. 459/2007 dated 18.4.2007 in their favour. Copy of the order is furnished.
3. The learned Counsel submits that the issue is covered in their favour and therefore, the appeals be allowed. He also refers to the similar order passed in the case of The Ugar Sugar Works Ltd. v. CCE, Belgaum by Final Order No. 468/2007 dated 18.4.2007. A copy of this order is also furnished.
4. The learned SDR reiterated the departmental view.
5. We find that the issue in both these appeals is covered. The findings recorded in the case of The Ugar Sugar Works Ltd. v. CCE, Belgaum by Final Order No. 468/2007 dated 18.4.2007 in Para 4 and 5 is reproduced.
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. 01.03.2005, 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 01.03.2005, 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 22072000. Therefore, the contention that Rectified Spirit has become non-excisable w.e.f. 01.03.2005 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) ELT 400 (Tri.-Bang.) and the Final Order Nos. 56 to 59/2007 dated 30.11.2006 in the case of The Godavari Sugar Mills Ltd. and Ors. 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 ltrs. of Rectified Spirit cleared without payment of duty.
4.1. As regards the furnace oil, we find that it is used to generate steam. The steam is partly used for generation of electricity and partly for processing the molasses in the distillery resulting in the production of Carbon Di-Oxide and Rectified Spirit/Denatured Spirit. Therefore, it cannot be said that the furnace oil is used only in the manufacture of Rectified Spirit. It is actually a common input used in the manufacture of exempted Rectified Spirit/dutiable Denatured Spirit and Carbon Di-Oxide. The Tribunal, in the case of Raymond Ltd. v. CCE, Mumbai-III , has held that Modvat Credit is admissible in respect of fuel oil used to manufacture intermediate product steam which is further used for manufacture of final product or for any other purposes within the factory of production. In view of the above case law, there is no need for reversal of credit on any portion of furnace oil attributable to Rectified Spirit.
5. Summing up, we hold that credit availed on the Molasses and Furnace Oil is in order and there is no need to reverse it. In the above circumstances, the impugned order has no merit. There is no justification for imposition of any penalty or demand of interest under Section 11AB. Thus, we allow the appeal with consequential relief, if any.
So also the findings recorded in Final order No. 459/2007 dated 18.4.2007 in Shri Hiranyakeshi Sahakari Sakkare Karkhana Niyamit v. CCE, Belagum in Para 4 and 5 is also reproduced herein 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. 01.03.2005, Rectified Spirit has become non-excisable and, therefore, no Cenvat Credit could have been availed by the appellant. The appellant has contended that prior to 01.03.2005, 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 22072000. Therefore, the contention that Rectified Spirit has become non-excisable w.e.f. 01.03.2005 is totally wrong. We find that even though the Molasses is first converted into Rectified Spirit, still 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 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) ELT 400(Tri.-Bang.) and the Final Order Nos. 56 to 59/2007 dated 30.11.2006 in the case of The Godavari Sugar Mills Ltd. and Ors. v. CCE. It is on record that the appellants had reversed total Cenvat credit of Rs. 1,05,51,223/- attributable to the molasses used in or in relation to the manufacture of 4078248 ltrs. of Rectified Spirit cleared without payment of duty. Therefore, we hold that the credit availed on Molasses is in order and there is no need to reverse it.
5. In the above circumstances, the impugned order has no merit. There is no justification for imposition of any penalty or demand of interest under Section 11AB. Thus, we allow the appeal with consequential relief, if any.
6. Both the Final Orders noted supra applies to the facts of the case. Respectfully following the ratio thereof, the impugned orders are set aside and the appeals are allowed with consequential relief, if any.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)