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TMI Blog2024 (7) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... to bring any evidence to the effect as to from where they were getting steam for the manufacture of exempted goods and because of that, it was reasonably postulated by him that FAP was used as fuel in one of the boilers, which in turn produces steam and which in turn was used in the manufacture of certain exempted final goods. Despite the Appellants making repeated claims about the FAP not being used for any exempted goods and furnishing all the relevant details to the Department, no further enquiry or investigations were carried out to crosscheck as to whether Appellant s assertions were correct or otherwise. In fact, they have gone a step further by invoking the extended period also, even though there is no evidence on record to establish that the FAP has been used for manufacture of exempted product and that it was done deliberately and intentionally to evade payment of duty. In fact, the Appellants themselves have informed the Department about their intended use way back in 2007 itself and till the issue of SCN in 2012 no verification was carried out to prove to the contrary by the Department. There is no cogent verifiable evidence on the record to suggest that FAP was used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atty acids, where Fatty Acid Pitch (FAP) emerges as an intermediate product, a part of which is cleared on payment of Central Excise Duty and the remaining quantity was consumed captively in the boilers wherein steam is generated. Department also noted that the Appellants were claiming exemption for the FAP, which was being consumed captively, under Notification No.67/95-CE dt.16.03.1995. On going through the coverage and conditions of the said notification which, inter alia, provided for non-applicability of the notification in case the inputs are used in or in relation to the manufacture of final products which are exempt from the whole of the duty of Excise leviable thereon or are chargeable to nil rate of duty. The Department stated that the Appellants were manufacturing both dutiable goods viz., Refined Glycerine, Refined RB Wax, Cake Gel, Spent Nickel Catalyst, Stearic acid, Fatty acids, Vegetable Origin Margarine, as also non-dutiable goods viz., Refined Palm Oil, Refined Palmolein, Refined Sesame Oil, NB Kokum Fat, NB Sal Stearine, NB Shea Steraine, Vanaspathi, Hydrogen Technical Oil, Vegetable Origin Margarine, etc. They also stated that the steam generated by using such F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in turn is used in the process of dutiable goods viz., Stearic Acid. It is therefore, their submission that they are rightly availing the exemption on the Fatty Acid Pitch used as a fuel for thermic fluid heater for generation of heat energy that is subsequently used in the processing of only dutiable goods. Therefore, it is their submission that the question of non compliance with the conditions specified under Rule 6(3) of CCR 2004 does not arise in their case. 5. The Commissioner also relied on the fact that the Appellants had accepted that FAP being used captively as a fuel media is used for production of steam in the boiler. Further, what he has categorically observed is that the energy produced by using FAP, regardless of whether the thermic fluid heater is considered as a boiler or not, is used exclusively in processing of the dutiable goods is not clearly demonstrated, though so claimed. The Assessee did not specifically disclosed as to the source of steam or heat energy that is being made use of in the process of other vegetable oil products that attract nil rate of duty. He has also gone through the manufacturing process employed in manufacturing the vegetable oils, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also submitted that while the Adjudicating Authority has confirmed the demand on the grounds that the Audit officers verified that there was no demarcation among the three boilers and hence the Appellants could not conclusively prove that they were using FAP in the boiler used for production of dutiable products. The said verification report or Audit Memo were of the Audit officers was not part of the SCN and therefore, impugned order is illegal and invalid as held in various cases including in the case of CCE, Mumbai Vs Toyo Engineering India Ltd [2006 (201) ELT 513 (SC)]. 8. He has also contested the demand on the grounds of limitation. He has submitted that in the year 2007 itself the Appellants had intimated the Department about the usage of FAP for production of dutiable products, which were meant for export and subsequently, details of usage, manufacturing process, etc., were also submitted and at that point, no objection was raised by the Department or any enquiry was conducted. He has also submitted that the Appellants were filing returns regularly showing the details of FAP used for captive consumption and nothing barred the Department from verifying this fact. He has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FAP as fuel within their factory premises for said purpose. They have, categorically stated that they were manufacturing Fatty acids, Stearic acid, and in the manufacturing of the said dutiable products they are using FAP as fuel. According to the Appellants, FAP is used as fuel for the purpose of generating heat energy which is required for the purpose of splitting and distillation of Fatty acids and further for production of Stearic acid. Therefore, since both distilled Fatty acids as well as Stearic acid being dutiable in respect of which FAP has been used as fuel, it would be entitled for benefit under Notification 67/95- CE. 13. In letter dt.09.05.2011, responding to the letter dt.26.04.2011 from the Department, the Appellants informed that the heat energy generated by using FAP as fuel within the factory was exclusively for the purpose of manufacturing dutiable goods viz., Fatty acids Stearic acid and are sold in domestic market on payment of Central Excise duty and not for export. 14. We further find that there has been lot of correspondences between the Appellants and the Department starting with letter dt.22.01.2007 when the Appellants informed that they would be captivel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... empted goods and because of that, it was reasonably postulated by him that FAP was used as fuel in one of the boilers, which in turn produces steam and which in turn was used in the manufacture of certain exempted final goods. The Appellants have been consistently stating and informing the Department that the said FAP was being used only in a particular generator of heat source, which is not considered as boiler and the said heat source was used only in the Fatty Acid distillation plant for manufacture of Fatty acids, as also its further consumption in the manufacture of Stearic Acid, both being dutiable products. What is to be noted is that despite the Appellants making repeated claims about the FAP not being used for any exempted goods and furnishing all the relevant details to the Department, no further enquiry or investigations were carried out to crosscheck as to whether Appellant s assertions were correct or otherwise. In fact, they have gone a step further by invoking the extended period also, even though there is no evidence on record to establish that the FAP has been used for manufacture of exempted product and that it was done deliberately and intentionally to evade paym ..... X X X X Extracts X X X X X X X X Extracts X X X X
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