2008 (1) TMI 38 - AT - Central Excise

Appellant is under bonafide belief availing the benefit of Notification No.67/95-CE in as much as the fuel was being used captively in his power plant demand sustained which is under limitation period but penalty set aside

Summary

Issues:
Demand of duty on fuel used in the manufacture of electricity for residential purposes and supplied to GEB grid; Imposition of personal penalty; Barred by limitation for show cause notice dt.4.9.01; Justification for penalty imposition; Interpretation of notification No.67/95-CE; Provisional assessments and imposition of penalty.

Analysis:
1. The appellant, engaged in the manufacture of petroleum products, set up a captive co-generation power plant using fuel as a main input. The issue arose when a part of the fuel was used for electricity production for residential purposes and supplied to GEB grid, impacting the benefit of Notification No.67/95-CE. Show cause notices were issued for duty demand on this fuel usage, confirmed by the adjudicating authority with personal penalty imposition, leading to the present appeal.

2. The appellant's advocate argued that the appellant believed in the exemption for fuel used in electricity production, but conceded post the Supreme Court decision that such exemption was not valid. However, the advocate contended that the show cause notice for the period July 1999 to July 2000 was time-barred, citing the appellant's expressed doubt on notification entitlement. The advocate emphasized that penalties were unwarranted due to the appellant's genuine belief and provisional assessments.

3. The tribunal noted the appellant's proactive approach in addressing doubts on fuel usage for electricity generation, as evidenced by their letters to the authorities seeking clarification and paying duty from August 2000 onwards. The tribunal found no suppression or malafide intent by the appellant, especially considering the past decisions by judicial bodies supporting the appellant's belief in entitlement to exemption under the notification.

4. Regarding penalties, the tribunal referenced precedents where penalty imposition was deemed unwarranted when show cause notices were issued within the normal limitation period and assessments were provisional. The tribunal agreed that penalties under Section 11AC were not sustainable in this case, leading to the setting aside of penalties imposed in the show cause notices, except for the one dated 4.9.01, which was held to be barred by limitation.

5. In conclusion, the tribunal upheld the demand of duty for the balance 6 show cause notices, except for the one dated 4.9.01, which was deemed barred by limitation. The penalties imposed on the appellants were set aside for the balance 6 show cause notices, considering the circumstances and legal precedents cited.

This comprehensive analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD covers the issues, arguments presented, tribunal's findings, and the final decision rendered by the members.