1999 (11) TMI 133 - AT - Central Excise

Summary

Issues:
1. Whether furnace oil and heavy petroleum stock qualify as feed stock for the generation of steam.
2. Whether the appellants are entitled to the benefit of exemption for heavy petroleum stock and furnace oil used in the manufacture of Methanol sent to units outside the factory premises.

Analysis:
1. The appeals revolve around the appellants' use of furnace oil and heavy petroleum stocks procured duty-free under Notification No. 75/84-C.E. The department alleged misuse, prompting SCNs. The appellants argued that Methanol produced using these items was integral to their fertilizer manufacturing process. The Collector, however, confirmed the demand. The consultant cited a Patna High Court judgment supporting the use of such items as feed stock for steam generation in fertilizer production. The consultant urged compliance based on this precedent. In contrast, the SDR referenced tribunal decisions disqualifying such use for exemption. The Tribunal examined two key issues: the feed stock qualification and the entitlement for Methanol production. It concurred with the Patna High Court's stance on feed stock but ruled against extending the exemption to Methanol sent outside the unit.

2. The first issue centered on whether furnace oil and heavy petroleum stock were legitimate feed stock for steam generation. The consultant relied on the Patna High Court's interpretation, arguing for compliance. In contrast, the SDR referenced tribunal decisions negating such eligibility for exemption. The Tribunal aligned with the Patna High Court's view, deeming these items as feed stock. The second issue pertained to the appellants' entitlement to exemption for Methanol production sent outside the unit. The Tribunal clarified that while heavy petroleum stock and furnace oil were covered under the notification, Methanol was not. Therefore, the benefit of the notification did not extend to Methanol sent to units outside the primary manufacturing unit.

This comprehensive analysis of the judgment addresses the issues raised, the arguments presented, and the Tribunal's decision, providing a detailed understanding of the legal complexities involved in the case.