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2016 (11) TMI 1215 - AT - Central ExciseLevy of tax - use of natural gas or gas for heating, in manufacture of the soap, is use of power for manufacturing - suppression of facts - extended period of limitation - Held that - the ld. Commissioner have misconceived and misdirected himself by concluding that the use of gas for heating of soap chemicals by the appellant s industry, amounts to use of power. In view of the clarification given by CBEC in their Circulars dated 22/3/68 and 25/3/68, we find that there was no reason for not following the same and drawing conclusion based on the definition in another Act, which is not cognate to the provisions of the Central Excise Act. In the facts and circumstances, we also find that there is no contumacious conduct or suppression of the part of appellants, in order to evade payment of Central Excise duty. Accordingly, we also hold that the extended period of limitation is not available to the Revenue. Accordingly, we set aside the impugned order and allow the appeals.
Issues:
1. Whether the use of natural gas for heating in the manufacture of soap constitutes the use of power for manufacturing, making the appellant liable to pay Excise Duty? 2. Whether the penalties imposed on the appellant and individuals are justified? 3. Whether the extended period of limitation is applicable to the Revenue in this case? Analysis: Issue 1: Use of natural gas for heating in soap manufacturing The dispute arose from the Commissioner's Order-in-Original, alleging that the use of natural gas by the appellant in soap manufacturing constitutes the use of power, thus attracting Excise Duty. The appellant contested this, citing CBEC Circulars clarifying that the use of gas for heating does not amount to the use of power. The Tribunal agreed with the appellant, noting that the Commissioner misdirected himself by not following the CBEC Circulars. The Tribunal emphasized that the definition of power in another Act should not be applied when it is not related to the Central Excise Act. Consequently, the Tribunal held that the appellant was not liable to pay Excise Duty for using natural gas in soap manufacturing. Issue 2: Penalties imposed on the appellant and individuals The Commissioner had imposed significant penalties on the appellant and three individuals associated with the company. The appellant challenged these penalties, arguing that there was no contumacious conduct or suppression to evade Excise Duty. The Tribunal, after considering the arguments, found no evidence of such conduct by the appellants. Therefore, the Tribunal held that the penalties imposed were not justified and set them aside. Issue 3: Applicability of the extended period of limitation The Revenue had invoked the extended period of limitation while issuing the Show Cause Notice to the appellant. However, the Tribunal, after examining the facts and circumstances of the case, concluded that there was no contumacious conduct or suppression on the part of the appellants. As a result, the Tribunal held that the extended period of limitation was not applicable to the Revenue. Therefore, the Tribunal set aside the impugned order and allowed the appeals, entitling the appellant to consequential benefits in accordance with the law. In conclusion, the Tribunal ruled in favor of the appellant, stating that the use of natural gas for heating in soap manufacturing does not amount to the use of power for manufacturing, thereby relieving the appellant from the Excise Duty liability. The Tribunal also found the penalties imposed on the appellant and individuals unjustified and held that the extended period of limitation was not applicable in this case.
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