Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2006 (3) TMI 598

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... d within the factory for generation of electricity for their captive consumption. The appellant had in the classification list claimed the benefit of the Notification No. 75/84, dated 1-3-84. It was alleged in the show cause notices, that the condition laid down in that notification was not fulfilled and, therefore, clearance at nil rate of duty was illegal and inadmissible. The classification list indicated that the said product was intended for use as fuel for generation of electricity by specified undertaking, in a refinery. All the notices were of similar nature except the difference in the last notice dated 30-2-1996, in which instead of Serial No. 4, Serial No. 9 was mentioned after the amendment in the earlier entries. 3. In their defence, the appellant had raised the contention that they were petroleum refinery and having regard to their needs they had their own thermal power station, the electricity generated from which was used for their refinery purposes. The appellant had obtained sanction of the State Government under Section 28 of the Electricity Act, 1910, for producing power to meet the requirement of electrical energy required in running the plants and for vari .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ring to the decision of the Tribunal in Indian Oil Corporation v. Collector reported in 1985 (19) E.L.T. 145 (Tri.), it was contended that the said decision related to the eligibility of exemption under Notification 352/77 whereas in the instant case benefit was claimed under Notification No. 75/84. In Paragraph 10 of the impugned order, the Commissioner considered the plea of the appellant based on Serial No. 34 of the table annexed to the Notification No. 75/84, dated 1-3-84 as well as Notification No. 217/86, dated 2-4-1986, as amended, and the contention that the appellant was entitled to the benefit of exemption under those notifications even when the product was used as fuel within the refinery for production of finished petroleum products directly, or indirectly via generation of electricity. In paragraph 11 of the impugned order the learned Commissioner held that the appellant was not entitled to the exemption claimed either against Serial No. 34 or against Serial No. 54 of the table to the Notification No. 75/84 as well as under Notification No. 217/86, dated 2-4-1986 and that the clearance/removal of the excisable goods without payment of Central Excise duty amounted to c .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... E.L.T. 1021 (Tri. - Del.) in which the Tribunal relying on the decision of the Supreme Court in Jaypee Rewa Cement v. Commissioner of Central Excise reported in 2001 (133) E.L.T. 312 (Tri. - LB) and the circular of the Board dated 6-7-1983, held that the manufacture of electricity at the intermediate stage was only incidental and did not affect the eligibility to exemption and, therefore, LSHS used in the manufacture of electricity which in turn was used in the refinery was entitled to exemption. However, exemption was not available in respect of LSHS used in the manufacture of electricity which was disposed of otherwise than its being used in the refinery. The learned counsel more than once stated that the appellant does not want to press its claim on the basis of Serial No. 54 of the Notification No. 75/84 and now confines its claim only on the basis of Serial No. 34 of that notification and on Notification Nos. 217/86, as amended by Notification No. 61/94 and 67/95, for the period subsequent to the omission of Serial No. 34 from the Notification No. 75/84 by virtue of Notification No. 61/94 dated 1-3-94. 6. The learned authorized representative for the department supporting th .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... petroleum or shale or blending of non-duty paid products was carried on and utilized as fuel within the same premises for the production or manufacture of finished petroleum products from the whole of duty of excise leviable thereon. The exemption was thus available to petroleum products which were utilized as fuel within the same premises for the production or manufacture of finished petroleum products produced in the refineries. This notification was rescinded by Notification No. 86/90, w.e.f. 20-3-1990. In respect of the said exemption which is of the same nature, as is claimed by the appellant on the basis of Serial No. 34 of the Notification No. 75/84, the CBEC had issued instructions on 6-7-1983 mentioning that it was decided that since generation of electrical energy, electricity as intermediate product, is incidental in the process and manufacture of petroleum products falling under Tariff Item 6 to 11AA. The exemption contained in the Notification No. 352/77-C.E., dated 16-2-1977, as amended by Notification No. 131/80-C.E., dated 23-8-1980 and 41/82-CE, dated 28-2-1982, would be available to the quantity of intermediate product-electricity. The exemption contained in the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... s centred around the issue whether fuel used in the thermal power station could be said to have been used as a fuel in a refinery. It is, however, clear from the wordings of entry No. 34 read with the opening part of Notification No. 75/84 that, the emphasis for the purpose of exemption is on the fuel being intended for use in a refinery. Use of fuel in a refinery can be done by generating electricity for the purpose of the refinery in the process of manufacturing the finished petroleum products. Even where such use is elsewhere than in the factory of production, the benefit of exemption would be available if the procedure set out in Chapter X of the Central Excise Rules is followed, as is clear from the proviso to the opening part of the notification granting exemption. In the present case, however, from the record it appears that fuel was used in generation of electricity in a thermal power station which was within the refinery premises. This factual aspect emanates from the fact that the appellant had clearly asserted right from the beginning that its thermal power station was situated within the licensed/refinery premises (paragraph 3.6 of the impugned order) and this fact is a .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... troleum products in the refinery was an intermediate product used in the manufacture of the final petroleum product and, therefore, the fuel used for generating such electrical energy qualified for exemption under Serial No. 34 of the Table annexed to the Notification No. 75/84, and on this aspect we follow the ratio of the earlier decision of this Tribunal in IOC Limited v. Commissioner of Central Excise, reported in 2002 (148) E.L.T. 1021 (Tri. - Del.), which was based on the ratio of the decision of the Supreme Court in Jaypee Rewa Cement s case. The appellants will accordingly be entitled to the benefit of the Notification No. 75/84 under Serial No. 34 in respect of the said fuel LSHS used in generating electrical energy within the refinery premises, which electricity was used in manufacturing the final refinery products and they will obviously be not entitled to any exemption in respect of use of said fuel attributable to supply of electrical energy for any other purpose, as claimed. This will cover the period upto 1-3-1994, when entry No. 34 came to be omitted by Notification No. 4/94. 8. For the period from 1-3-1994 reliance has been placed on the Notification No. 217/86, .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... or in relation to manufacture of final products specified in column 3 of the Table from the whole of duty of excise leviable thereon. Therefore, for the remaining subsequent period under the demand, the appellant was entitled to the benefit of this notification in respect of LSHS used as input for generating electricity to the extent that such electricity was used within the factory of production in relation to the manufacture of final products of the refinery of the appellant. 9. For the foregoing reasons, we hold that the appellant would be entitled to claim the benefit of exemption under entry No. 34 of Notification No. 75/84 in respect of the said fuel LSHS used by the appellant in its premises for the purpose of generating electricity to the extent that such electricity was used in the refinery premises for the purpose of manufacturing the refinery products till 1-3-1994 and thereafter, was entitled to similar benefit for the subsequent period under the Notification No. 217/86, as amended by Notification No. 61/94 upto 16-3-1995 and thereafter for similar benefit under Notification No. 67/94. The appellant is not entitled to benefit of exemption in respect of electricity ge .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates