2001 (2) TMI 768 - Commissioner - Central Excise

Summary

Issues:
- Appeal against denial of duty exemption under Notification No. 67/95 for using 'dolo char' and 'char' in the generation of electricity.
- Violation of principles of natural justice due to lack of proper show cause notice (S.C.N.) before rejection of claim.

Analysis:
1. Issue: Appeal against denial of duty exemption
- The appellant, M/s. H.E.G. Ltd., filed an appeal against the Order-in-Original denying duty exemption under Notification No. 67/95 for using 'dolo char' and 'char' in electricity generation.
- The appellant argued that the by-products 'dolo char' and 'char' are used in generating steam, which is then used for electricity production within the factory.
- They contended that even if some electricity goes to the grid outside the factory, the exemption should apply to the quantity of 'dolo char' and 'char' used internally for sponge iron manufacture.
- The adjudicating authority rejected their claim without considering the inputs used for electricity generation, such as waste heat and coal, leading to a summary dismissal of their case.

2. Issue: Violation of principles of natural justice
- The appellant raised concerns over the lack of a proper show cause notice (S.C.N.) before the rejection of their claim, alleging a violation of natural justice principles.
- They pointed out that they were only given a short notice for a personal hearing without a detailed S.C.N., which they argued did not provide a fair opportunity to defend their case.
- The appellant emphasized that the inputs 'char' and 'dolo char' were entirely used internally for electricity generation, and any attempt to quantify the portion of electricity not used internally would be impractical due to the various inputs involved in the process.

3. Judgment
- After careful consideration of the submissions and arguments from both parties, the judge set aside the Order-in-Original and allowed the appeal.
- The judge found merit in the appellant's contentions regarding the proper utilization of 'char' and 'dolo char' for internal electricity generation, meeting the conditions of Notification No. 67/95.
- Additionally, the judge upheld the appellant's claim of a violation of natural justice due to the inadequate notice provided before the rejection of their claim, emphasizing the importance of a proper show cause notice in legal proceedings.