Custom, Excise & Service Tax Tribunal
M/S Niphad Ssk Ltd vs Cce Nasik on 4 August, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/3502/04
Arising out of Order-in-Original No. 28/CEX/2004 dated 8.9.2004 passed by the Commissioner of Central Excise & Customs, Nasik.
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Honble Shri P.S.Pruthi, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
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 Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
M/s Niphad SSk Ltd.
:
Appellant
Versus
CCE Nasik
Respondent
Appearance Shri A.P. Kolte, Advocate for appellant Shri V.K. Agarwal, Addl. Commissioner (A.R.) For Respondent CORAM:
Shri Ashok Jindal, Member (Judicial) Shri P.S. Pruthi, Member (Technical) Date of Hearing : 04.08.2014 Date of Decision : 04.08.2014 ORDER NO.
Per P.S. Pruthi The appellant is before us being aggrieved by the order-in-original of Commissioner Nasik in which he confirmed Excise duty of Rs.83,95,165/- and Rs.60,08,860/- and imposed penalties of Rs.23,86,309/- & Rs.48,11,590/- and ordered payment of interest as applicable.
2. Brief facts of the case are that the appellant manufacture sugar, molasses, ethyl alcohol, denatured ethyl alcohol etc.. During manufacturing of sugar, molasses is generated which is excisable. Molasses is also purchased from outside. From all molasses the appellant manufacture ethyl alcohol stored in a single tank which is chargeable to nil rate of duty and the ethyl alcohol is also further used to manufacture non-excisable potable denatured ethyl alcohol. Show-cause notice was issued demanding duty of Rs.83,95,165/- on 17690.330 MTs of molasses produced in the factory and captively used for manufacture of exempted ethyl alcohol during March 2002 to June 2003. Further an amount of Rs.60,08,860/- was also demanded as CENVAT Credit attributable to molasses of 12017.720 MT used in manufacture of 28,82,472.90 bulk litres of exempted ethyl alcohol.
3. Heard both sides.
4. The contention of the learned Counsel is that they availed CENVAT Credit of Rs.52,84,845/- of duty paid on molasses purchased from outside. As the ethyl alcohol manufactured from the molasses which is purchased from outside as well as manufactured by them was kept in one tank, they reversed the CENVAT Credit on the entire quantity of molasses contained in ethyl alcohol cleared for captive consumption as well as for sale to outside parties. They had also submitted debit notes every month to the Range Supdt. showing the molasses consumed in ethyl alcohol and the duty paid at the rate of Rs.500/- per metric tonne on such molasses. They urged that they are eligible for benefit of Notification 67/95-C.E as amended by Notification 31/2001-CE dated 01.06.2001 which provides exemption to captively consumed goods even if the final products are exempt from duty provided the manufacturer discharge the obligation prescribed under Rule 57AD substituted by Rule 6 of Cenvat Credit Rules, 2001 by Notification 35/2001 of the Central Excise Rules. Further it was stated that by Notification 5/2002 Central Excise Rules, 2002 were issued under which Rule 6(3)(a)(1) states that where a manufacturer, manufacturing goods under Heading 2204 (ethyl alcohol) opts not to maintain separate accounts for dutiable and exempted goods, he can pay an amount equivalent to the CENVAT Credit attributable to inputs used in the final products. On issue of limitation, the learned Counsel stated that they had been intimating reversal of credit on molasses on a monthly basis at the rate Rs.500/- per metric tonne through debit notes.
5. Revenue defended the findings of the Commissioner.
6. We have carefully considered the submissions made by both the sides.
7. The first issue is regarding the recovery of duty on molasses a quantity of 16790.330 capitvely consumed on the ground that the final products are non-dutiable. It is seen from the debit notes raised every month by the appellant to the Superintendent of Division III of Nasik that the molasses used in manufacture of ethyl alcohol was systematically reversed every month either from RG-23 account or from PLA account and intimated to the department. We have seen the copies of the debit notes. One debit note No.90/03-04 dated 07.06.2003 bears the stamp of Inspector of the Range. In any case the authenticity of the debit notes has not contested by the Revenue. It is seen from the documents submitted in the appeal that Superintendent Range I had directed the appellant 1997 to reverse proportionate credit as per the provisions of then Rule 57CC of the Central Excise Rules which provided for the procedure of payment of duty on inputs used in the manufacture of exempted as well as dutiable final products. On this basis, the appellant was reversing the credit on molasses every month and intimating the department by means of the debit notes. The total amount of duty of Rs.83,95,165/- on quantity of 16790.330 MTs of molasses has admittedly been paid. Therefore, the demand of duty on molasses used in the manufacture of exempted ethyl alcohol is not sustainable. The next part of the demand is on credit attributable to 12017.20 MTs of molasses used in relation to the manufacture of 2882472.90 litres of ethyl alcohol. We find that the Commissioner has confused the issue. The entire credit on 16790 tonnes of molasses has already been shown as reversed/paid. Thus this demand seeks reversal of CENVAT Credit twice which is not at all justified.
7.1 The Commissioner in his order has upheld the demand invoking extended period. Although we do not agree with the Commissioners findings on merits itself, we also find that extended time period cannot be invoked because the appellant had been submitting monthly details in the form of debit notes showing the credit reversals.
8. In view of the above, the order-in-original is set aside and appeal is allowed.
(Dictated in open Court) (Ashok Jindal) Member (Judicial) (P.S. Pruthi) Member (Technical) nsk ??
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