2004 (4) TMI 524 - Commissioner - Central Excise

Demand - End-use exemption - Appeal to Commissioner (Appeals) - New plea - Penalty - Imposition of

Summary

Issues Involved:
1. Duty and penalty imposition on inputs used for generating electricity.
2. Applicability of concessional rate of duty on inputs.
3. Refund claim by the Appellants.
4. Penalty imposition and its legality.

Issue 1: Duty and penalty imposition on inputs used for generating electricity:
The Appellants were manufacturing Ammonia and Fertilizers using Naphtha/Natural Gasoline Liquid (NGL) procured at a concessional rate of duty. Show Cause Notices were issued alleging that inputs procured at nil duty were not used for intended purposes, resulting in duty demands and penalties. The Adjudicating Authority confirmed the charges, relying on previous orders. The Appellants contested, citing previous judgments and submitted that most electricity generated was used in the plant, thus seeking waiver of pre-deposit. The Commissioner found that a portion of inputs used for generating electricity were not eligible for concessional duty, in line with previous judgments. The Appellants were held liable to pay duty for inputs used for electricity generation diverted to the township.

Issue 2: Applicability of concessional rate of duty on inputs:
Regarding Appeal No. 240/2003, the Adjudicating Authority confirmed duty on inputs used for electricity generation, where the Appellants were not entitled to concessional duty. The Appellants procured inputs at a lower rate but were required to pay an additional amount to suppliers if not used for intended purposes. The Commissioner determined that duty liability should only apply to the quantity of inputs used for generating electricity for the township, not the entire past quantity. The actual duty payable was to be calculated by jurisdictional officers accordingly.

Issue 3: Refund claim by the Appellants:
The Appellants claimed a refund, stating they had overpaid duty. However, as the impugned order did not address the refund issue, and the claim was raised for the first time during proceedings, the plea for a refund was not considered at that stage.

Issue 4: Penalty imposition and its legality:
The Appellants argued against penalties imposed, referencing a Tribunal decision that set aside a previous penalty. The Commissioner, following the Tribunal's ruling, set aside the penalties in both Appeals, citing that penalties under Rule 173Q were not applicable for violations of Rule 196. Consequently, the penalties were revoked based on the Tribunal's decision.

In conclusion, the judgment addressed duty and penalty imposition on inputs used for electricity generation, the applicability of concessional duty rates, the Appellants' refund claim, and the legality of penalties imposed. The Commissioner's decision was based on previous orders, legal interpretations, and relevant case law, ultimately resulting in adjustments to duty liabilities and the revocation of penalties.