9911796707
TMI Blog2002 (11) TMI 648X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellants manufacture various excisable goods; that in one of the Division, they manufacture fertilizer; that they have installed captive power plant as under catering to the power requirement of their factory :- Plant Number of Firing arrangement Fuel Boilers Turbines 35 2 1 Pulverized Coal Coal (Furnace Oil as supportive fuel) MW Tangentially Fired 30 MW 2 1 Atmospheric Fluidized Bed Combustion Coal 10 1 1 Atmospheric Fluidized Coal MW Bed Combustion 10.3 0 1 -- -- MW 2.2 He further, mentioned that all the boilers are essentially coal fired and furnace oil is used as a supportive oil for boilers of 35 MW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3.1 The learned Advocate submitted that the furnace oil is capable of being used only in the 35 MW Power plant which has been catering to the power requirement of fertilizer plant ever since 1991; that the total power requirement of the various plants are as under : Plant Power Requirement - MW Fertilizer and Power Plant 40.0 Caustic Soda - Cell House 15.8 Aux. + Projects 2.3 Cement 3.8 PVC 2.7 Carbide-Furnace 28.8 Auxiliary 1.2 Total 94.6 3.2 He contended that from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umption of power. Reliance has also been placed on the decision in the case of Tata Chemical v. CCE, Surat, Final Order No. 418/99-C, dated 21-5-1999. He also relied upon the decision in the case of Indian Farmers Fertiliser Coop. Ltd. v. CCE, Ahmedabad, 1996 (86) E.L.T. 177 (S.C.) wherein the benefit of notification was allowed though the raw naphtha was used to produce ammonia which in turn was used in off-site plants namely water treatment plant, steam generation plant, inert gas generation plant and effluent treatment plant. The Court observed that there is no good reason why the exemption should be limited to the raw naphtha used for producing ammonia that is utilized directly in the urea plant; that exemption notification does not req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted alternatively that if duty on furnace oil is payable, the said duty is available as Modvat credit. He relied upon the decision of the Larger Bench of the Tribunal in the case of Jay Yushin Ltd. v. CCE, New Delhi, 2000 (119) E.L.T. 718 (T) wherein it has been held that as far as Revenue neutralization exercise is concerned, the said benefit is available if the assessee is able to demonstrate with reference to the Modvat credit available to himself. He also mentioned that imposition of penalty under Section 11AC of the Central Excise Act is incorrect as the period involved is prior to coming into force of the said provision; that moreover no penalty is imposable since there is no diversion of the furnace oil for use other than as su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; that it is proved to the satisfaction of an officer not below the rank of the Assistant Commissioner of Central Excise having jurisdiction that such good are cleared for intended use; (b) where such use is elsewhere than in the factory of production, the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed. 7. It is not in dispute that the appellants have followed the procedure set out in Chapter X. The benefit of the notification has been disallowed as the power generated by using the fertilizer has not been directly taken to the fertilizer plant as the same has been pooled together with the power generated by other power plants in a common grid. The Revenue's main contention is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mains that fertilizer has been manufactured. The Revenue also cannot say that only the power generated by other Power Plants has been utilized for manufacture of fertilizers. Thus the requirement of notification that the furnace oil is "intended for use otherwise than as feed stock in the manufacture of fertilizers" has been complied with by the appellants. The Apex Court in the case of Steel Authority of India has interpreted the expression "intended for use." The Court has held that "the exemption notification required proof that the raw naphtha was "intended for use" in the manufacture of fertilizer and not that the raw naphtha was used in the manufacture of fertilizer...... It does not appear to be correct to hold, as the Tribunal did i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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