2007 (8) TMI 153 - AT - Central Excise

Demand Revenue contended that appellant is not entitle for the benefit of Notification No. 4/97-C.E. and confirmed the demand along with penalty but as per appellant on the pretext of judgement avail the benefit of said notification Allowed benefit of notification to appellant

Summary

Issues:
- Demand of duty on furnace oil obtained without payment of duty
- Denial of benefit of exemption based on use of furnace oil
- Imposition of personal penalties
- Aspect of timebar in issuing show cause notice
- Interpretation of "feedstock" in the manufacture of fertilizers
- Divergent views on the definition of "feedstock" by different courts
- Legal obligation of officers in issuing CT-2 certificates
- Justifiability of penalty imposition

Analysis:

1. The judgment confirms the demand of duty against the appellant for obtaining furnace oil without payment of duty during a specific period. The denial of exemption benefit is based on the use of furnace oil for drying rock phosphate and wet granules of single super phosphate fertilizer, which does not qualify as the use of furnace oil as feedstock. Consequently, the demand is upheld, and personal penalties are imposed on both the manufacturing unit and the Director.

2. The appellant's counsel concedes that the Supreme Court has previously ruled on the merit issue related to the use of furnace oil in steam generation. However, the appellant challenges the timebar aspect, arguing that the show cause notice was issued after following the necessary procedures, and the Revenue was aware of all relevant facts, thus preventing the invocation of the extended period for demand.

3. The judgment delves into the interpretation of "feedstock" in the context of fertilizer manufacturing, citing various decisions by the Tribunal and High Courts. While there were conflicting views on whether furnace oil qualifies as feedstock, the Supreme Court's ruling in a specific case clarified the matter. The appellant's procurement of CT-2 certificates after due application and verification process is highlighted, indicating no suppression or mala fide intent. Consequently, the demand of duty beyond the limitation period is deemed unsustainable, and the matter is remanded for quantifying duty within the limitation period.

4. Given the absence of suppression or misstatement by the appellant, the imposition of penalties is deemed unjustified and set aside. The judgment concludes by disposing of the appeal based on the above findings, emphasizing the lack of justification for penalty imposition in the given circumstances.