1984 (3) TMI 378 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 118/75 for exemption from excise duty on steam generated in a factory and supplied to other units.
2. Question of limitation under Rule 10A for the period of demand.

Analysis:
1. The central issue in this case revolved around the interpretation of Notification No. 118/75, concerning the exemption from excise duty on steam utilized within a factory and subsequently supplied to other units. The appellants argued that the high-pressure steam, after being used internally, transformed into medium and low-pressure steam, which was then supplied to other units. They contended that the initial use of high-pressure steam within their factory should be considered as meeting the conditions of the exemption notification. However, the Tribunal disagreed, emphasizing that the concept of "use" in the notification implied complete consumption or "captive consumption." Comparisons were drawn with other exemption notifications to support the interpretation that partial use without complete consumption did not qualify for the exemption.

2. Regarding the question of limitation, the show cause notice was issued on 30-4-1977, concerning the period from 1-3-1975. The appellants argued that Rule 10A was not applicable, and the demand should be governed by Rule 10 read with Rule 173J, imposing a one-year time limit. The Tribunal agreed with the appellants, noting that the classification list submitted by the appellants in March 1975 explicitly mentioned the production and supply of medium and low-pressure steam. The excise authorities had approved this list without indicating duty liability, leading to the conclusion that Rule 10A did not apply, and demands prior to 1-5-1976 were time-barred.

In conclusion, the Tribunal held that the steam supplied by the appellants to other factories did not qualify for the exemption under Notification No. 118/75. Additionally, the demand for duty was deemed enforceable only from 1-5-1976 due to the application of Rule 10 for the limitation period, providing the appellants with consequential relief.