2013 (6) TMI 320 - AT - Central Excise

Benefit of Notification No. 1/95-CX denied - demand confirmed in respect of Furnace Oil which is consumed in the generation of electricity which is sold for State Electricity Board - as per assessee in his process no furnace oil is used in the generation of steam which is used in the TG-3 hence the demand in sustainable - Held that - It is an admitted facts that 3 rd Turbo generating sets is used for generation of electricity which is sold outside the 100% EOU and not for the manufacture of goods exported. The applicants are clearing steam on payment of appropriate duty to that outside unit. Therefore, prima facie no merit in the contention of applicant that steam is not excisable. Thus the applicants are directed to deposit an amount of Rs.36,07,253/- within a period of eight weeks. On deposit of the above mentioned amount, the pre-deposit of the dues are waived and recovery of the same is stayed during the pendency of the appeals.

Summary

Issues:
1. Waiver of pre-deposit of Rs.1,15,50,001/-, interest, and penalty.
2. Demand confirmation in respect of steam consumed captively in the third Turbine Generator.
3. Demand confirmation in respect of Furnace Oil consumed in the generation of electricity.
4. Applicability of Notification No. 1/95-CX.
5. Time-barred demand and suppression of facts.
6. Excisability of steam generated and sold outside the 100% EOU.

Analysis:
The applicant sought a waiver of pre-deposit of a substantial amount along with interest and penalty. The demand was confirmed concerning the steam consumed in the third Turbine Generator for electricity generation sold to the Maharashtra State Electricity Board, and the Furnace Oil consumed in electricity generation sold to the State Electricity Board. The applicant contended that the demand related to the Furnace Oil was unsustainable due to the process not involving the use of furnace oil, and the demand on steam was invalid as the steam was waste and not marketable. Additionally, the applicant argued that the demand was time-barred as the show cause notice invoked an extended period of limitation based on alleged suppression of facts, which the applicant denied.

The Revenue argued that the steam was excisable and subject to duty, as evidenced by the applicant clearing steam to another entity on payment of appropriate duty. It was contended that since the electricity generated from the third Turbine Generator was sold to the Maharashtra State Electricity Board, the Furnace Oil used in the boilers for steam generation was not eligible for the exemption provided under Notification No. 1/95-CX for raw material procurement by a 100% EOU without duty payment.

The Tribunal found that the third Turbine Generator was used for generating electricity sold outside the 100% EOU and not for manufacturing goods for export. As the applicant was clearing steam to an external unit on payment of duty, the Tribunal concluded that the steam was excisable. Consequently, the Tribunal directed the applicant to deposit a specific amount within a specified period, with the waiver of pre-deposit and stay on recovery during the appeal's pendency. The compliance deadline was set for a future date.

In conclusion, the judgment addressed the waiver of pre-deposit, demand confirmation related to steam and Furnace Oil consumption, applicability of Notification No. 1/95-CX, time-barred demand, and the excisability of steam generated and sold outside the 100% EOU. The decision provided detailed reasoning based on the contentions of both parties and established the obligations of the applicant in light of the circumstances and legal provisions cited during the proceedings.