Customs, Excise and Gold Tribunal - Delhi
Somaiya Organics (I) Ltd. vs Commissioner Of C. Ex. on 1 September, 1997
Equivalent citations: 1999(107)ELT805(TRI-DEL)
ORDER Lajja Ram, Member (T)
1. In this appeal filed by M/s. Somaiya Organics (I) Ltd., the matter relates to the eligibility of the denatured Ethyl Alcohol to the benefit of money credit scheme under Notification No. 231/87-C.E., dated 1-10-1987, as amended, issued under Rule 57K of the Central Excise Rules, 1944. The appellants were bringing denatured ethyl alcohol and were taking credit on such denatured ethyl alcohol. The show cause notice was issued by the Superintendent of Central Excise on 29-4-1994 for the period April 1989 to February 1994, proposing to disallow the credit on 0.2% of the quantity of the denatured ethyl alcohol on the ground that this quantity of 0.2% represented the denaturant which were not eligible for the benefit of Notification No. 231 /87-C.E.
2. I have heard Shri M.P. Dev Nath, Advocate, for the appellants and Shri D.K. Nayyar, JDR, for the Respondents/Revenue.
3. I have carefully considered the submissions made by both sides and have gone through the facts on record. Under Notification No. 231/87-C.E., dated 1-10-1987, as amended, issued under Rule 57K of the Central Excise Rules, 1944, the ethyl alcohol when used in the manufacture of the specified final products as the raw material was eligible for the credit of money subject to the conditions as given in that notification. Under Heading No. 22.04 ethyl alcohol of any strength, whether denatured or not, but not including alcoholic liquor for human consumption, was excisable. The denatured ethyl alcohol is ethyl alcohol for the purposes of Heading No. 22.04. Shri D.K. Nayyar, JDR, had contended that in Notification No. 231/87-C.E., the expression used is 'ethyl alcohol' and not 'denatured ethyl alcohol' and while denatured ethyl alcohol was eligible for the benefit, no such benefit was Available to that quantity which represented the denaturants. Shri M.P. Dev Nath, Advocate, had referred to the Hyderabad Collectorate Trade Notice No. 209/89, General No. 77/89, dated 31-10-1989 appearing at page 40-C of Volume 24 of the Excise & Customs Reporter which reads as under :
"It has been represented by the trade that money credit on specially denatured Ethyl Alcohol used in the manufacture of styrene is being denied under Notification No. 231/87-C.E., dated 1-10-1987 issued under Rule 57K.
The matter has been examined and it has been decided that money credit will be admissible on specially denatured Ethyl Alcohol used in the manufacture of styrene under Rule 57K read with Notification No. 231/87-C.E., dated 1-10-1987, as amended (issued from File No. IV/16/23/89/MP1)."
4. The learned Advocate had also referred to the definition of denaturation, denatured alcohol and specially denatured alcohol as appearing in Concise Chemical and Technical Dictionary edited by H. Bennett, F.A.I.C., Fourth Enlarged Edition, which are as under: denaturation. Irreversible conversion of a protein into a metaprotein; the addition to alcohol of a disagreeable tasting or poisonous substance to render it unfit for use as a beverage or in medicine. denatured alcohol. Ethyl alcohol to which ingredients have been added to make it unfit for beverage purposes, the denaturants used being selected to be least objectionable for its particular use in the finished product. denatured alcohol, specially. Ethyl alcohol rendered unfit for beverage use by the addition of one or more substances, but which is suitable for many specialized industries.
5. It is seen that the denaturation is a irreversible process and it is resorted to make the ethyl alcohol as unfit for beverage purposes. The denaturation will differ depending upon the finished product in which the denatured ethyl alcohol is to be used.
6. In view of the above, it does not appear proper to deduct the quantity of denaturant from the denatured ethyl alcohol for the purposes of extending the benefit of Notification No. 231/87 C.E.
7. The learned Departmental Representative had referred to the Tribunal's decision in the appellants' own case as reported in 1994 (71) E.L.T. 597 (Tribunal). I find that the issue for determination in that appeal was different. Para 1 from that decision is extracted below :
Jyoti Balasundaram, Member (J) "The issue for determination in this appeal is the eligibility or otherwise of the appellants to the benefit of the money credit scheme in terms of Notification No. 231/87, dated 1-10-1987 issued under Rule 57K of the Central Excise Rules, 1944 for "Solvent-75" and Paraldehyde manufactured by the appellants - according to the Department the benefit is not available as these two final products are not specified as such in the notification while according to the appellants the two products are only wastes or by-products and not final products or alternately, once acetaldehyde is manufactured and entitled to the benefit of the scheme, its further polymerisation into paraldehyde cannot disentitle it from the above benefit."
8. In view of the above discussion, I consider that the demand of Central Excise duty in respect of denaturants in the denatured ethyl alcohol was not correct.
9. The appellants have also referred to the question of limitation and have pleaded that the major portion of the demand was hit by time bar.
10. As I consider that the appellants have a case on merits, it is not necessary to go into the question of limitation.
11. Taking all the relevant considerations into account, I allow this appeal.