2001 (10) TMI 111 - HC - Central Excise

Summary

Issues involved:
The judgment involves the interpretation of Central Excise Rules regarding the use of furnace oil by a manufacturing company during a shut-down period, leading to an alleged evasion of Central Excise Duty.

Details of the Judgment:

1. Issue of Contravention of Central Excise Rules:
The respondent, engaged in fertilizer and ammonia manufacturing, used furnace oil during a shut-down period for maintenance and repair of plant machinery. A show cause notice alleged contravention of Rules 196(1) and 210 of the Central Excise Rules, stating evasion of Central Excise Duty. The adjudicating authority confirmed the demand under Rule 9(2) of the Central Excise Rules, which was challenged in appeal.

2. Appeal and Decision by CEGAT:
The Commissioner (Appeals) upheld the demand under Rule 9(2) of the Central Excise Rules. However, the CEGAT set aside this order, stating that a demand under Rule 9(2) cannot be sustained without contravention of Rule 9(1). The Revenue challenged this decision, questioning the correctness of setting aside the Order-in-Original.

3. Legal Interpretation and Precedents:
The High Court analyzed the legal provisions and cited precedents to determine the eligibility for concessional rate of duty. It highlighted that the use of furnace oil for steam generation, essential for electricity production during shut-down, was integral to the manufacturing process. Citing previous judgments, the Court emphasized the interconnectedness of processes in manufacturing.

4. Final Decision and Dismissal of Petition:
Based on the legal analysis and precedents, the High Court dismissed the Revenue's petition, affirming that the furnace oil usage during shut-down for steam generation and electricity production was entitled to the concessional rate of duty. The Court's decision was in favor of the respondent, upholding the use of furnace oil for maintenance and repair activities during the shut-down period.