Custom, Excise & Service Tax Tribunal
M/S. Kothari Sugaras & Chemicals Ltd vs Cce, Trichy on 30 September, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/CO/7/05, E/CO/8/05 and E/918/2003 and E/919/2003
(Arising out of Order in Appeal No. 321 & 322/2003 (SCN) TRY-II dated 28.07.2003, passed by the Commissioner of Customs and Central Excise (Appeals), Trichy).
For approval and signature
Honble Ms. JYOTI BALASUNDARAM, Vice President
Honble Dr. CHITTARANJAN SATAPATHY, Technical Member
___________________________________________________________
1. Whether Press Reporters may be allowed to see the :
order for Publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether the Honble Member wishes to see the fair :
copy of the Order.
4. Whether order is to be circulated to the :
Departmental Authorities? ___________________________________________________________
M/s. Kothari Sugaras & Chemicals Ltd., : Appellant
Vs.
CCE, Trichy : Respondent
Appearance Shri M. Kannan, Adv., for the appellant Shri V.V. Hariharan, JCDR, for the respondent CORAM Honble Ms. JYOTI BALASUNDARAM, Vice President Honble Dr. CHITTARANJAN SATAPATHY, Technical Member Date of hearing : 30.09.09 Date of decision : 30.09.09 Final ORDER No._____________ Per: Dr. Chittaranjan Satapathy, Heard both sides. The appellants are manufacturers of sugar who obtain molasses as a by product which in turn are used to produce Ethyl Alcohol, part of which is denatured and cleared on payment of appropriate excise duty. The department has raised a demand at the rate of Rs. 500/- per MT in respect of molasses which is used in the production of undenatured ethyl alcohol.
2. The appellants have paid 8% of the value of clearance of such undenatured ethyl alcohol (rectified spirit) under the impression that such payment is required under Rule 57CC since input duty credit has been taken and the appellants are manufacturing both dutiable finished goods and rectified spirit on which no duty is paid.
3. The appellants have claimed exemption on molasses under Notification No. 67/95-CE dated 16.03.95, which exempts inputs used in or in relation to manufacture of final products. The exemption is subject to the proviso that it will not apply if the final products are exempted or charged to nil rate of duty. The Notification has been amended with effect from 01.06.2001. This amendment allows exemption even in respect of exempted and nil rated final products if 8% is paid under Rule 57AD corresponding to earlier Rule 57CC.
4. The appellants have paid 8% on the rectified spirit but since the period is prior to the amendment of the Notification No. 67/95, the lower appellate authority has not allowed the benefit of Notification No. 67/95 to the appellants. The appellants have cited the following decisions in their support:
a. Godavari Sugar Mills Ltd. Vs. CCE, Belgaum 2007 (212) ELT 234 (Tri.-Bang.) b. CCE, Ahmedabad Vs. Tilaknagar Industries Ltd. 2008 (225) ELT 51 (Bom.) C. Sakthi Sugars Ltd. Vs. CCE, Salem 2008 (230) ELT 676 (Tri.- Chen.) However, after perusal of these decisions, both sides agree that these decisions relate to periods after amendment of the Notification No. 67/95.
5. From the appeal memorandum, we find that the appellants have taken another plea that the impugned goods are not excisable at all. They have also taken the plea that the benefit of Notification No. 67/95 cannot be denied as the department has not shown that the rectified spirit cleared by the appellants is a dutiable excisable goods and is either exempted or carries nil rate of duty. We find this line of argument attractive as prima facie undenatured ethyl alcohol is outside the scope of the central excise levy. For the purpose of the main provision of Notification No. 67/95, we find that molasses will be covered under coloum 2 of the table as input and undenatured ethyl alcohol will be covered under final products under coloum 3 of the table as the same has been include in the tariff schedule under Chapter 22. However, to attract the mischief of the proviso which denies the exemption for exempted and nil rated final product, the goods must be excisable. The excisable goods are defined in the Central Excise Act, 1944 as goods specified in the tariff schedule as being subject to a duty of excise. Since undenatured ethyl alcohol is outside the purview of the central levy, it is not subject to a duty of excise under the Central Excise Act, 1944 and hence, not excisable. As a corollary, the same cannot be treated as either exempted goods or chargeable to nil rate of duty.
6. At this stage, we note that only alcoholic liquor for home consumption is specifically excluded from the union list and hence it requires to be effectively verified that the undenatured ethyl alcohol (rectified spirit) cleared by the appellants without payment of duty is actually the alcoholic liquor for home consumption. Subject to such aspect to be verified, the appellants will be entitled to the exemption in respect of molasses under Notification No. 67/95 without being hit by the proviso thereon. For this limited purpose of verification, we set aside the impugned orders and remand the matter to the original authority. We also note that the appellants are not claiming the refund of the amount of 8% of the value of denatured ethyl alcohol in these proceedings.
7. As regards the cross objection filed by the department against the stay orders, we find there is no provision to file such cross objection and hence the same are rejected.
(Operative part of the Order pronounced in the open Court on 22.09.09)
(Dr. CHITTARANJAN SATAPATHY) (JYOTI BALASUNDARAM)
TECHNICAL MEMBER VICE PRESIDENT
BB
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