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TMI Blog2006 (2) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... eneration provided such electricity is used for production of final products and also for other purposes so long as it is used within the factory of production. He has passed a detailed speaking order and has held that in respect of the electricity used in the residential premises/township the appellants are not eligible for the input duty credit, on the ground that such residential area is not part of the factory premises nor it can be considered to be falling within precincts of the factory premises. He has also referred to Explanation-II to the definition of factory under the Factories Act, 1948, which states that the area where an Electronic Data Processing Unit is installed in any premises or part thereof, shall not be construed as a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITTARANJAN SATAPATHY, JJ. For the Appellant : Shri V.S. Nankani, Advocate For the Respondent : Shri S.S. Bhagat, SDR, ORDER Chittaranjan Satapathy, Member (T) 1. Heard both sides. The adjudicating Commissioner has confirmed the duty demand of Rs. 28,58,643/- disallowing the Modvat/Cenvat credit on furnace oil for the period 1997-98 to 2001-02 (upto January, 2002) used for generation of electricity supplied to the residential colony/town ship of the appellants. He has also imposed redemption fine of Rs. 20 lakhs in respect of the impugned furnace oil, which was not available for confiscation. He has also imposed a penalty of Rs. 30 lakhs and has ordered recovery of appropriate interest under the law. 2. At the time of consideration of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 572 (Tri.-Kol.) 5. After considering the arguments from both sides including the cited case laws, we find that it is not in dispute that the appellants have used part of the electricity within the factory and partly for the township and that they have taken Modvat/Cenvat credit of duty paid on the entire furnace oil used in the generation of such electricity. 6. We find that the adjudicating Commissioner has correctly noted the provisions under the relevant rules, which allow credit of duty on furnace oil used in electricity generation provided such electricity is used for production of final products and also for other purposes so long as it is used within the factory of production. He has passed a detailed speaking order and has held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been referred to by the adjudicating Commissioner, as mentioned by us in paragraph 6 above. On the other hand, we find that the two decisions of the co-ordinate Benches in the cases of SAIL (supra), specifically disallow input duty credit in respect of electricity provided to office premises and township. 8. The learned Advocate for the appellants has also pleaded before us that the township was part of the ground plan approved by the Central Excise Superintendent, and hence, the same should be treated as part of the factory. We find that the ground plan submitted at the time of registration of the manufacturer under the Central Excise Rules is for the purpose of identifying the premises, which will be used by the manufacturer for produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the adjudicating Commissioner has rightly recorded in his order that the appellants are not eligible for the impugned credit and yet they willfully and wrongly availed the same without any intimation to the department. Hence, we are of the view that the duty demand has been correctly confirmed by the adjudicating Commissioner applying the extended period of limitation. However, as regards the redemption fine, we are of the view that the same is not warranted in the circumstances of the case including the fact that the goods are not available for confiscation. We, therefore, set aside the redemption fine. As regards the penalty of Rs. 30 lakhs, we are of the view that the same is disproportionately high considering the amount of ineligible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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