2018 (12) TMI 1025 - AT - Central Excise

Benefit of duty free captive consumption to goods manufactured in a factory - N/N. 67/95-CE dated 16/03/1995 - Who is manufacturer - Held that - Notification No. 67/95 dated 16/03/1995 which extends the benefit of duty free clearance for captive exemption within the factory. In the present case, it is not in dispute that Oxygen manufactured within the factory of H.E.C. is further consumed captively in the manufacture of other dutiable final products - In as much as, there is no dispute on these facts, the benefit of N/N. 67/95-CE, will be available for the goods irrespective of who is considered as the manufacturer. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Liability for payment of duty on Oxygen Gas manufactured within a factory premises under a contractual agreement.
2. Interpretation of Notification No. 67/95-CE dated 16/03/1995 for duty-free captive consumption.
3. Determination of the manufacturer of Oxygen Gas under the Central Excise Act, 1944.

Analysis:

Issue 1:
The case involved a contractual agreement between a manufacturing company and another entity for the production of Oxygen Gas within the factory premises. The Revenue contended that the entity manufacturing the gas should be liable for duty payment. The Commissioner initially decided in favor of the Revenue, but the matter was remanded for a fresh decision. The Adjudicating Authority in the subsequent decision dropped the demand against the manufacturing entity and the penalties proposed against both parties. The Revenue appealed this decision.

Issue 2:
The Advocate for the respondent argued that regardless of the manufacturer, duty liability cannot be imposed on the entity manufacturing the Oxygen Gas due to the benefit provided under Notification No. 67/95-CE dated 16/03/1995. This notification allows duty-free captive consumption of goods manufactured within a factory for the production of dutiable final products. The respondent emphasized that the Oxygen Gas was being consumed within the factory for the manufacture of other excisable goods, making it eligible for the duty exemption.

Issue 3:
The Tribunal analyzed the terms of the contract between the two parties and concluded that the manufacturing company should be considered as the manufacturer of the Oxygen Gas. This decision was based on the employment of the other entity for carrying out the manufacturing process, aligning with the definition of manufacturer under the Central Excise Act, 1944. The Tribunal also considered the Notification No. 67/95-CE and determined that the duty exemption would apply to the goods manufactured within the factory premises, irrespective of which party was considered the manufacturer.

In the final judgment, the Tribunal upheld the decision of the Adjudicating Authority, rejecting the appeals filed by the Revenue. The Tribunal distinguished the cited case law provided by the Revenue, emphasizing the unique factual aspects of the present case. The judgment highlighted the captive consumption of Oxygen Gas within the factory for the production of other dutiable final products, reinforcing the applicability of the duty exemption under the relevant notification.