CX - Since Denatured Alcohol and Carbon Dioxide produced by Assessee, were exempted from Central Excise & did not attract State duty either, Assessee cannot avail Cenvat credit on capital goods used to set up plant which produced these items: CESTAT

2024-TIOL-37-CESTAT-DEL

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
COURT NO. I

Excise Appeal No. 50804 of 2019

(Arising out of Order-in-Original No. DDN-EXCUS-000-COM-04-2019, Dated: 06.02.2019
Passed by the Commissioner, Central GST Commissioenrate-Dehradun)

Date of Hearing: 14.11.2023
Date of Decision: 29.11.2023

RAI BAHADUR NARAIN SINGH SUGAR MILLS LTD
P O LAKSAR, DISTT. HARIDWAR (UTTRAKHAND),
(II) AALOK ARORA, ADVOCATE,
82- MISSION COMPOUND, SAHARANPUR (UP)

Vs

COMMISSIONER OF CENTRAL GST,
DEHRADUN COMMISSIONER CENTRAL GST DEHRADUN,
E-BLOCK, NEHRU COLONY, DEHRADUN (UTTRAKHAND)

Appellant Rep by: Shri Aalok Arora, Adv.
Respondent Rep by: Shri Rakesh Agarwal, AR

CORAM: Justice Dilip Gupta, President
P V Subba Rao, Member (T)

CX - The Appellant is a sugar mill located in Haridwar, Uttarakhand - Factories located in this area were entitled for area-based exemption as per Notification No 50/2003-CE dated 10.6.2003 which exempted the excisable goods manufactured by the factories in this area from the whole of the duty - The Appellant claimed the benefit of this exemption which was available up to 2.11.2014 - The Appellant further expanded its capacity by adding a distillery unit in the same premises - A by-product of sugar industry is molasses which the sugar factories either sell or, if they have a distillery unit, distill it into alcohol - This alcohol (known as rectified spirit in pure form) can be sold for human consumption in which case it is chargeable to State Excise duty and no central excise duty is chargeable - It can also be denatured (by adding some denaturants) making it unfit for human consumption and sold for industrial use - Denatured alcohol is subject to Central Excise Duty (and not state Excise duty as it is not included in the List II (State List) of the Seventh Schedule of the Constitution) - The appellant availed the Capital Goods CENVAT Credit on the capital goods used in setting up the distillery plant during the period of exemption - It also availed CENVAT credit on the input services used in setting up the distillery unit - The undisputed legal position is that if the final products are exempted, no CENVAT credit on the inputs, input services or capital goods can be availed - According to the Revenue, the Appellant, having...