2007 (5) TMI 378 - AT - Central Excise

Furnace oil/LDO/HSD - Exemption under Notification No. 1/95-C.E. as consumable - denial of benefit on the ground that the consumable does not include fuel - Held that - It is undisputed that furnace oil/LDO/HSD was being procured under Notification No. 1/95. It is also undisputed that the appellant had consumed the same in the manufacture of final products, which were subsequently exported. The appellant had fulfilled export obligation as imposed whey they got registered as EOU. Furnace oil/LDO/HSD procured by appellants are covered under heading consumable in Notification No. 1/95 - appellant had correctly followed the provisions of Notification No. 1/95, as amended - appeal allowed - decided in favor of appellant.

Summary

Issues: Interpretation of the term "consumable" under Notification No. 1/95 for duty exemption on furnace oil, HSD, and LDO procured by an EOU.

Analysis:
1. The case involved three appeals against an Order-in-Original confirming demand and imposing penalties on the appellants for procuring furnace oil, HSD, and LDO under Notification No. 1/95 as a 100% EOU engaged in manufacturing sheet glass.
2. The appellant contested the show cause notice, arguing that the goods were consumed in the factory premises, proper accounts were maintained, and export obligations were fulfilled, despite the adjudicating authority concluding otherwise.
3. The appellant's advocate argued that fuel should be considered a consumable under the notification, citing precedents like Jayant Agro Organics Ltd. v. C.C.E., Vadodara and Tata Tea Limited v. C.C.E., Kochi to support their interpretation.
4. The revenue's representative contended that fuel cannot be classified as consumable, especially post-amendment to the notification.
5. The adjudicating authority denied duty exemption on fuel, stating that furnace oil, HSD, and LDO were not covered under the term "consumables" in the notification, leading to the confirmation of demand.
6. Referring to past decisions, the Tribunal held that furnace oil used as fuel for boilers could be considered a consumable, thus overturning the adjudicating authority's decision.
7. Ultimately, the Tribunal ruled in favor of the appellants, determining that furnace oil, LDO, and HSD procured by them were indeed covered under the heading of "consumable" in Notification No. 1/95, setting aside the impugned order and allowing the appeals with consequential relief.

This detailed analysis highlights the key arguments, interpretations, and decisions made in the legal judgment regarding the interpretation of the term "consumable" for duty exemption on specific goods procured by an EOU under a particular notification.