NEW SWADESHI SUGAR MILLS Vs. CCE

JUDGEMENT

(1.) IN this appeal which has been preferred by the appellants against the part of the impugned order in appeal, the issue relates to the entitlement of the appellants to the utilization of the modvat credit already earned by them prior to the enforcement of the new Cenvat Credit Rules, 2002.

(2.) THE facts are not much in dispute. The appellants prior to the enforcement of the new Cenvat Credit Rules, 2002, were working under the Cenvat Credit Rules, 2001. They had two units -one for the manufacture of sugar and molasses and the other for distilling of denatured spirit (dutiable product) and rectified spirit (Non -dutiable product). They applied for grant of single license for both the units, as the distilling unit was using molasses manufactured by sugar unit, as inputs, for the manufacture of dutiable and non -dutiable products named above, and both the units were located in the same premises. The Commissioner has allowed their prayer and granted them the single license. Under the Cenvat Credit Rules, 2001, the appellants were also paying duty at the 8% of the value of the exempted goods cleared by them in lieu of the Cenvat Credit availed by them on the inputs utilized in the manufacture of their goods. They were also paying duty on the dutiable products i.e., denatured spirit.

(3.) ON the other hand, the learned JDR has contended that since the appellants were engaged in the manufacture of dutiable and non -dutiable products in the same unit, Rule 6 and 3 of the Rules, 2002 specifically prohibited the availment of cenvat credit and as such, they are not entitled to utilize the same.