2012 (10) TMI 625 - AT - Central Excise

Manufacturing refinery gas under chapter heading No.27.11 of CETA, 1985 - demand of duty & penalty - Held that - As decided in assessee s own case where Board itself via Circular No.246/80/96-CX dated 1.10.96 had considered the very same goods not to be considered as a manufactured product, notwithstanding it is subsequent used in the refinery for pollution control purposes, the same cannot be held to be either marketable or a manufactured product. Accordingly, the impugned order demanding a duty including the penalty imposed is set aside - in favour of assessee.

Summary

Issues:
Appeal against Order-in-Original confirming duty demand and penalty imposition - Interpretation of manufacturing refinery gas under chapter heading No.27.11 of CETA, 1985 - Comparison with previous judgments - Marketability and manufacturing status of the gas - Applicability of Board's Circular No.246/80/96-CX - Sustainability of Commissioner's order.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Kolkata involved an appeal against Order-in-Original No.24/M.P./Ayukt/97-98 confirming a duty demand and penalty imposition. The case revolved around the manufacturing of refinery gas under chapter heading No.27.11 of CETA, 1985 by the appellants. The Commissioner had upheld the proposal in the show cause notice issued against the appellant, leading to the appeal. However, upon examining the case records, the Tribunal noted that previous appeals in the appellant's own case and in another case had been allowed, indicating a favorable precedent. The ld.A.R. did not contest this observation.

Further scrutiny of the facts revealed that the appellants had been manufacturing refinery gas from 1989-90 to June 1994, utilizing it in their thermal power station for electricity generation. The generated electricity was used both within the refinery and supplied to the township for non-refinery purposes. The Tribunal highlighted that the gas, which was previously flared into the atmosphere, was now being utilized in the refinery for pollution control measures, as per the submissions made by the Senior Advocate for the appellants. Reference was made to Board's Circular No.246/80/96-CX, which had classified the gas as not a manufactured product, leading to its removal from the list of exempted goods.

Based on the arguments presented, the Tribunal concluded that the gas was not marketable and did not qualify as a manufactured product, especially considering its utilization for pollution control purposes within the refinery. Consequently, the impugned order confirming duty demand and penalty imposition was set aside, and the appeal was allowed with any consequential relief as per law. The Tribunal deemed the Commissioner's order unsustainable in light of the precedents and the specific circumstances of the case, ultimately ruling in favor of the appellant.