1982 (9) TMI 231 - Board - Central Excise

Issues:
1. Duty demand under Rule 9(2) of the Central Excise Rules and imposition of penalty on M/s. Fertilizer Corporation of India by the Collector of Central Excise, Patna.
2. Contention regarding the use of electricity in the Settling Tank Pump House for industrial purposes and exemption under Notification No. 52/78.
3. Allegations of misdeclaration and suppression of information by the Collector.
4. Interpretation of Notification No. 52/78 and determination of whether the electricity in question was used in the industrial unit.
5. Consideration of the essential role of the Settling Tank Pump House in the industrial unit and the time-barred nature of the duty demand.

Analysis:

1. The appeal was filed by M/s. Fertilizer Corporation of India against duty demand and penalty imposed by the Collector of Central Excise, Patna. The Collector alleged that the electricity used for filtering water in the Settling Tank Pump House was not charged to duty, leading to the wrongful availment of exemption. The Collector also accused the appellants of deliberate evasion of duty, resulting in the duty demand and penalty.

2. The appellants contended that the Settling Tank Pump House is part of the industrial unit, and the electricity used in it is for industrial purposes. They argued that even though some water from the Pump House is supplied to non-industrial units, the electricity consumption within the Pump House satisfies the requirements of Notification No. 52/78. The appellants denied suppression of information and misstatement, claiming that the Department had finalized the scrutiny of RT-12 returns.

3. During the hearing in New Delhi, the appellants' advocate emphasized that the electricity generated by the industrial unit is used in the Pump House, which is an integral part of the industrial unit. The advocate argued that the Collector's decision to disallow the exemption under Notification No. 52/78 was incorrect, as the electricity usage within the industrial unit complies with the Notification. The advocate also challenged the penalty orders, citing the finalization of RT-12 returns as evidence of no information suppression.

4. The Board analyzed the contentions and Notification No. 52/78, which exempts internally produced electricity used within an industrial unit from excise duty. The crucial question was whether the electricity in question was utilized within the industrial unit. The Board disagreed with the Collector's finding, stating that the Settling Tank Pump House is an essential part of the industrial unit, even if it serves non-industrial entities. The Board deemed the Collector's accusation of misstatement unfounded, especially after the finalization of RT-12 returns, making the duty demand time-barred and unsustainable on merits.

5. Ultimately, the Board set aside the Collector's orders, allowing the appeal of M/s. Fertilizer Corporation of India. The Board concluded that the electricity consumption in the Settling Tank Pump House, despite serving other entities, was integral to the industrial unit, rendering the duty demand unjustified. The Board highlighted the essential role of the Pump House in the industrial unit's operations and emphasized the time-barred nature of the duty demand.

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