TMI Blog2006 (11) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,93,15,875/- in respect of Steam Turbine Driver for generator imported by M/s. I.G. Petrochemicals Ltd. (appellant No. 1), by denying them the benefit of Notification No. 13/81-Cus. dated 9-2-1981 and Notification No. 53/97-Cus. dated 1-3-1997. (ii) Interest on the above demand stands confirmed by him in terms of Section 28AB of Customs Act, 1962. (iii) Central Excise duty of Rs. 2,82,924/- stands confirmed against the said appellant in respect of the indigenous capital goods accessories procured by them in terms of exemption Notification No. 1/95 along with confirmation of interest. (iv) Penalty of Rs. 1,93,15,875/- and Rs. 2,32,924/- stands imposed upon the said appellant in terms of provisions of Section 28(2) of the Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants are having two plant PA-I and PA-II for the manufacture of the said product and had imported turbine generator sets and diesel generator sets for captive power generation. One generator is connected to PA-I and the other is connected to PA-II. The dispute in the present appeal relates to duty free import of third generator in the year 1996 in terms of Notification No. 13/81-Cus. superceded by Notification No. 53/97-Cus. dated 1-3-97. The said notifications permit duty free import of the capital goods for the purpose of manufacture of articles for export out of India, or for being used in connection with the production or packaging or job work for export of goods out of India by 100% EOU, subject to fulfilment of conditions enumer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exclusively being sold to MSEB. He conceded that during the relevant period more than 99% of electricity produced was sold to MSEB and only a fraction of such electricity was used in the operation of PA-I and PA-II plant during the crisis period or as a power back set up. It has also not been seriously disputed that Notification No. 13/81-Cus. or Notification No. 53/97-Cus. allowed duty free imports by 100% EOU for use in the manufacture of goods to be exported. However, he submits that the Tribunal in the case of Indian Charge Chrome Ltd. v. Commissioner [2001 (138) E.L.T. 609 (Tribunal)], confirmed by the Hon ble Supreme Court reported in [2003 (157) E.L.T. A137 (S.C.)] has, while interpreting the same notification, has held that diversio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases related to excess production of electricity than what was required by the unit for production of goods. It was in those circumstances, Tribunal held that such excess production was not intentional and sale of surplus power generator will not violate the conditions of the notification. In the instant case the appellants are not indulging in sale of surplus power but the entire electricity generator is being sold. As such, he prays for rejection of the appeal. 6. After carefully considering the submissions made by both the sides, we find that the findings by the adjudicating authority that more than 99% of the power generated is being sold to MSEB stands accepted by the appellants. In such a situation, can it be said that more than 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods should be considered as grant of exemption also does not appeal to us. The applicability of the notification is required to be decided by the Customs authorities about the purpose of import of the said generator set. Even the permission of the Development Commissioner for sale of the power in DTA was never taken by the appellant, though, the same was taken in respect of the other waste material. As such, we are of the view that the duty of customs has been rightly confirmed against the appellant by denying them the benefit of notifications in question. Similarly confirmation of demand duty of Central Excise by holding that the capital goods procured for use as a accessories with the said generator sets were not eligible to notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sole intention for using the excess steam for production of electricity and to sell the same to electricity board. As such, we find that the adjudicating authority has rightly not applied the ratio of the earlier decision to the facts of the instant case. 8. In view of our forgoing discussions, we confirm the demand of Customs duty of Rs. 1,93,15,875/- and of Central Excise duty to Rs. 2,82,924/- against M/s. I.G. Petrochemicals Ltd. with confirmation of interest. However, keeping in view the facts and circumstances, especially that plant was imported with the knowledge and consent of the Development Commissioner, we reduce the penalty under the Customs Act to Rs. 50 lakhs (Rupees fifty lakhs only) and under the Central Excise Act of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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