2008 (11) TMI 480 - AT - Central Excise

Summary

Issues:
Benefit of Notification No. 1/95-C.E. dated 4-1-95 admissibility to Furnace Oil procured without duty payment against C.T.3 certificates for the period 1-4-96 to 14-9-98.

Detailed Analysis:

Issue 1: Benefit of Notification No. 1/95-C.E. admissibility
The appeals questioned if the respondents were entitled to the benefit of Notification No. 1/95-C.E. for Furnace Oil procured without duty payment against C.T.3 certificates from 1-4-96 to 14-9-98. The respondents, a 100% Export Oriented Unit, used the Furnace Oil in boilers for steam generation, essential for drying finished goods. The Directorate of Anti-Evasion issued a notice demanding Central Excise Duty, alleging the benefit was not applicable to the oil procured during that period. The Commissioner determined that the Furnace Oil fell under the category of "consumables" in the Notification, thus allowing the exemption. The Revenue challenged this decision in the present appeals.

Issue 2: Interpretation of "consumables"
The ld. SDR for the appellants argued that Furnace Oil, used as fuel, was distinct from "consumables." Referring to a Supreme Court judgment, it was highlighted that goods used for ancillary purposes were not considered "consumed" in the manufacturing process. However, the Furnace Oil was directly consumed in manufacturing the export goods, differentiating it from ancillary items. The ld. SDR's reliance on a different Supreme Court judgment regarding explicit inclusion in exemption Notifications was countered by the respondents, asserting that Furnace Oil fell under the "consumables" entry, as specified in the Notification.

Issue 3: Precedents and Tribunal Decisions
The Tribunal cited previous judgments like Tata Tea Limited v. Commissioner of Central Excise and others, establishing that prior to 15-9-98, the exemption under Notification No. 1/95-C.E. applied to indigenously procured Furnace Oil used for steam generation in boilers for manufacturing export products. These decisions, relevant to the period in question (1-4-96 to 14-9-98), supported the Commissioner's ruling, affirming the admissibility of the exemption to the respondents. Consequently, the appeals were dismissed, upholding the Commissioner's order.

Conclusion:
The Tribunal upheld the Commissioner's decision, emphasizing that the Furnace Oil procured by the respondents fell under the category of "consumables" in the Notification, making them eligible for the exemption. The judgments and precedents cited supported this interpretation, leading to the dismissal of the Revenue's appeals and the disposal of the respondents' Cross Objections.