ORDER
Gowri Shankar, Member (T)
1. The appeal is against the order of the Commissioner (Appeals) dismissing the appeal before her for failure to deposit Rs 10 lakhs and execute a bank guarantee of Rs 5 lakhs. The applicant was required to deposit duty of Rs 36.90 lakhs and a penalty of Rs. 3.70 lakhs.
2. The applicant, which is a sugar mill, is also engaged in the manufacture of denatured ethyl alcohol and potable ethyl alcohol. Denatured ethyl alcohol is subject to excise duty. Potable ethyl alcohol is not excisable under the Act. The applicant utilised for the manufacture of alcohol molasses that arose in its factory and the molasses that it purchased from outside. It did not pay duty on the molasses that was manufactured in its factory, claiming the exemption contained in notification 67/95. This notification exempts from duty goods manufactured in a factory and utilised in that factory for manufacture of excisable goods which are liable to duty (other than those specified such as clearance to 100% export oriented unit). Notice issued to the applicant proposed to deny the benefit of the exemption on the ground that it would not be available to those captivity consumed goods which were utilised in the manufacture of potable ethyl alcohol which is not liable to any excise duty. It is against the order confirming the demand and penalty proposed in this notice that the assessee appealed to the Commissioner (Appeals).
3. The contention of the counsel for the applicant is that the finished product consists of both dutiable denatured ethyl alcohol and non excisable potable ethyl alcohol. The department has not adduced evidence to show that the molasses in respect of which the exemption was claimed was used in the manufacture of the non excisable ethyl alcohol. That may be so. It is not disputed that both varieties of molasses, the one the assessee manufactured and the one that it purchased from outside became inseparably mixed and were utilised in the manufacture of potable ethyl alcohol which was subsequently denatured. It is therefore not possible to say at this stage that the molasses manufactured by the applicant was not utilised in the manufacture of non excisable alcohol. Although financial hardship is pleased, there is no evidence in support. The so called balance sheet relied upon by the applicant is not authenticated by any independent account. It is only consists of two sheets of paper signed by the office bearers.
4. We therefore do not find any ground to interfere with the deposit ordered by the Commissioner (Appeals). We therefore take up the appeal itself and we order that if the applicant deposits the amount and execute the bank guarantee as specified by the Commissioner (Appeals) within two months from the date of receipt of this order, the appeal before us shall stand allowed and the matter is remanded to the Commissioner (Appeals) for disposal of the appeal on merits in accordance. In the event of failure by the applicant to do so, the appeal before us shall stand dismissed.