2006 (5) TMI 53 - HC - Central Excise

Benefit of exemption not. 118/75 sought to be denied for clearances of steam cleared without payment of duty and without following the procedure laid down in Chapter X of the Rules, 1944 to another unit which did not fall under the purview of definition of Factory Tribunal was justified in extending the benefit of the Notification to a manufacturer whether the steam is used in the same factory or in another factory of the same manufacturer appeal dismissed

Summary

Issues:
Interpretation of Notification No. 118/75 dated 30th April, 1975 regarding duty exemption for steam used in manufacturing; Compliance with Chapter X procedures for duty exemption.

Analysis:
The appeal challenged the Tribunal's order extending the benefit of Notification No. 118/75 to the respondent-assessee for clearances of steam used in manufacturing without payment of duty. The appellant contended that the Tribunal erred in granting the benefit to another unit not falling under the definition of "Factory" during the relevant period. The respondent had two factories, one manufacturing sugar and the other producing "fusel oil," with steam from the sugar factory being utilized in the second factory.

The Notification exempted goods manufactured in a factory or for use in the same factory or another factory of the same manufacturer from excise duty. The Tribunal found that the steam produced by the sugar factory fell under the specified item and was used in the manufacturer's other factory, thus meeting the notification's requirements for duty exemption. The lower authorities had denied the exemption, citing non-compliance with Chapter X procedures and the use of steam in a different factory.

The High Court upheld the Tribunal's decision, emphasizing that the entitlement to exemption extends to a manufacturer using steam in any factory under the same ownership. The Court noted that the issue of adherence to Chapter X procedures was not raised before the Tribunal, and the denial of exemption by the Assessing Officer was based on technical grounds not argued at the appellate stage. As the matter pertained to the period 1980-83 and the substantial question of law was not considered valid, the Court dismissed the appeal.

In conclusion, the High Court affirmed the Tribunal's decision to grant duty exemption to the respondent for utilizing steam in a different factory under the same ownership, in accordance with Notification No. 118/75. The Court held that compliance with Chapter X procedures was not a valid ground for denial of exemption in this case, and the appeal challenging the Tribunal's order was dismissed.