2002 (11) TMI 203 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 1/95 regarding duty-free procurement of furnace oil by a 100% Export Oriented Unit (E.O.U.).
2. Determination of whether the appellant, a textile manufacturer without a captive power plant, is entitled to exemption for procuring furnace oil under the said notification.

Analysis:
1. The appellant, an E.O.U. engaged in textile fabric manufacturing, procured furnace oil duty-free under Notification No. 1/95 for export production. The issue arose when the Commissioner of Central Excise held that the appellant was not entitled to the exemption as fuels were allowed duty-free only for captive power plants, which the appellant did not possess.

2. The appellant contended that they were entitled to procure duty-free "consumables" under the notification, arguing that fuels are consumables and should be procured without duty. The Revenue argued that the goods covered by the notification's annexure are those required for manufacturing activities of each E.O.U., specifically for production within the factory premises.

3. The Tribunal analyzed the notification's provisions and held that an E.O.U.'s entitlement to duty-free imports is limited to goods required for its own manufacturing activities. Since the appellant did not have a captive power plant and electricity generation is a separate activity, the entitlement for duty-free fuels lies with the power plant owner, not consumers of electricity. The Tribunal emphasized specific entries in the notification for captive power plants, fuels, and furnace oil, indicating the limited scope of duty-free procurement.

4. It was concluded that the appellant, being a textile manufacturer without a captive power plant, was not entitled to procure duty-free furnace oil for supplying to another manufacturer's captive power plant. The Tribunal rejected the appellant's submission, emphasizing the notification's clear provisions and the availability of an alternate scheme for duty reimbursement by the Ministry of Commerce.

5. Therefore, the Tribunal upheld the Commissioner's decision and rejected the appellant's appeal, emphasizing the limited scope of duty-free procurement under Notification No. 1/95 for E.O.Us engaged in specific manufacturing activities within their own premises.