9911796707
TMI Blog2000 (12) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... s a manufacturer of hot briquetted iron and hot rolled steel coils in its mill at Hazira in Gujarat. In order to obtain the electricity required for running the steel mill, the appellant set up a subsidiary company M/s. Essar Power Limited (EPL for short), adjacent to the steel mill. The entire electricity generated by EPL is transmitted through the steel plant; some of it is utilised in the steel plant, the remaining being transmitted to the grid of the Gujarat State Electricity Board. EPL generated the electricity by means of turbines, which were fuelled by Natural Gasoline Liquid (NGL for short) and naphtha, purchased and supplied by the appellant. The appellant had declared the NGL as input under Rule 57G. It had also declared, under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termediate product must necessarily emerge out of the raw material in the course of the processes to which it is subjected in the factory of production. The other two appeals were decided by Commissioner (Appeals), Surat. That Commissioner (Appeals) took a different view. He found that clause (d) of the Explanation to Rule 57A did not provide that, for an input used to generate electricity to be considered to be an input, it was necessary that electricity should be used within the factory of production. He said that any input used in or in relation to the manufacture of final product could be an input. He found the essence of the scheme to allow the credit of fuel used to generate electricity used in the manufacture of the product. He howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. In other words the factory of production referred to in clause (d) is the factory of production, not of the electricity, but of the final product. This is the view that has also been taken by the Tribunal in Ballarpur Industries Ltd v. CCE - 2000 (116) E.L.T. 312. In the second paragraph numbered 7 of the order (there are two paragraphs with the same number), the larger bench said, Therefore, while the non-fuel input could not be covered by clause (d) to Explanation to Rule 57A, inputs used for generation of electricity covered by clause (d) introduced on 16-3-1995. This, according to us, is the true scope of the first Explanation of clause (d). The second line of Explanation to clause (d) refers to electricity used in the factory for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D specifies that the credit of duty shall be allowed in respect of inputs which are used for generation of electricity or steam used for manufacture of the final products or for any other purpose within the factory of production. We have already explained our understanding of the scope of the term factory or production . The object of inserting this proviso is clear that electricity is an intermediate product, and the credit of duty on inputs used for generation of electricity used in the manufacture of final product for any other purpose within the factory of production will be available for payment of the duty on final products. 7. Accordingly, it will have to be held that so much of the quantity of NGL which was used to generate elect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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