2009 (3) TMI 984 - AT - Central Excise

Summary

Issues involved: Levy of duty on Residuary Fuel Oil used as fuel within the refinery for manufacture of exempted goods such as Naphtha, Kerosene, and LPG, and denial of exemption for captive consumption.

Issue 1: Duty demand on fuel oil used as fuel in the manufacture of exempted goods

The Appellate Tribunal CESTAT Chennai considered the issue of demand of duty on fuel oil, the residue used as fuel in the refinery for manufacturing exempted goods like naphtha, kerosene, and LPG. The duty demand was based on the denial of exemption for captive consumption under Notification No. 65/95-CE. The period of demand ranged from April 2002 to February 2007.

Issue 2: Interpretation of exemption under Notification 67/95

The Tribunal noted that the issue in dispute had been settled in previous decisions, specifically referencing the cases of Godavari Sugar Mills Ltd. vs. CCE Belgaum and Sakthi Sugar Ltd. vs. CCE Salem. These decisions clarified that exemption under Notification 67/95 is available if cenvat credit attributable to inputs in exempted products is either reversed or paid. The Tribunal directed the Commissioner to consider these precedents and verify whether the appellants had availed cenvat credit on the exempted products before passing fresh orders.

Conclusion:

The impugned orders were set aside, and the appeals were allowed by way of remand for a fresh decision by the jurisdictional Commissioner. The Tribunal emphasized the need to apply the precedents cited and to provide the appellants with a reasonable opportunity to present their defense before new orders are issued.