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TMI Blog2024 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the petroleum products unless the BIS specifications are met, it would be illegal to sell such products. Therefore, the Test Report on the face of it, clarifies that the product is not marketable. The very same issue was before the Banglore Tribunal in the case of MANGALORE REFINERY PETROCHEM. LTD. VERSUS C. CE CUS., BANGALORE [ 2006 (4) TMI 361 - CESTAT, BANGALORE] , wherein the Tribunal has held ' we are of the view that the impugned product, as such is not marketable even though it is loosely termed as LSHS. Since the impugned product is not marketable, the same is not excisable. If the impugned product is not excisable, there is no merit in the demand of duties.' As on date, this decision of the Banglore Tribunal has not been stayed or overturned. Therefore, the issue has reached finality. Time Limitation - HELD THAT:- All the records of the LSHS manufactured and utilized for generation of electricity which is used within the factory and used in the township etc. are very much recorded. The Department did not take any timely action on raising the demand in respect of the LSHS used for the electricity which was consumed at their township refinery, hospital etc. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity Control Report of IOCL. He submits that as per BIS specification, the minimum Flash Point should be 76oC whereas this product has Flash Point between 50-64oC. Similarly the water content should have maximum of 1% whereas this product has water content of 1.5-5.0%. He submits that since the requirement as per BIS has not been met, the LSHS manufactured by the appellant cannot be sold in the market. Hence, it establishes that this product is not marketable. He further submits that in the Show Cause Notices issued, there is no allegation that the appellant has sold the LSHS in the open market. He draws attention to Para 2 of the Show Cause Notice wherein it is clearly stated that in respect of their products LSHS being cleared and consumed captively in the manufacture of electricity and which was subsequently being utilized in or in relation to manufacture of final products . Thus the Show Cause Notice does not allege in any place that the LSHS was being sold to any third party. All these facts clarify that though the product is manufactured by the appellant, since it does not meet the quality parameters set by BIS, the product is not at all marketable. 3. The Learned Counsel sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption is not available when LSHS is not used for generation of electricity within the refinery area. Therefore, he prays that the appeal may be dismissed. 7. Heard both sides and perused the documents placed before us. 8. On going through the Show Cause Notices, it is seen that the only ground taken by the Revenue is to the effect that the appellants have used LSHS and generated electricity which has been used both for the manufacturing purpose as well as for the electricity requirement within their township and hospital etc. In respect of the electricity used in the township and hospital, the Department has taken the view that Excise Duty exemption cannot be claimed. 9. On going through the Test Report given by the Quality Control Department of IOC, it is seen that they have compared the test results of the product vis- -vis BIS standards. In many cases, the parameters are not matching. In particular, the flash point of the LSHS is given as 50oC to 64oC the minimum requirement is 76oC. Similarly the water content found is 1.5% to 5% whereas the maximum permissible limit is 1% only. When such critical parameters are not met, the product cannot be marketed/sold by the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in the case of Madras Refineries Ltd. v. Commissioner of Central Excise, Chennai - 2005 (187) E.L.T. 34 (Tri.-Chennai) wherein identical issue has cropped up and it has been held that LSHS to the extent used for generating electricity supplied to the State Electricity Board could not be said to be used in the manufacture of petroleum products as refining required steam only at low pressure and it was liable to duty not being covered under warehousing provisions viz. erstwhile Chapter VII of the Central Excise Rules, 1944. The learned Advocate stated that the question of excisability of the LSHS used in the refinery was not before the Tribunal in the case relied on by the learned SDR and hence, the same is not relevant in deciding the excisability of the impugned product. 6 . We have gone through the records of the case carefully. We agree with the learned Advocate that the Madras Refineries Ltd. case, relied on by the Revenue, may not help us in deciding the excisability of the impugned product, as that question was not raised in that case. The appellants have furnished detailed technical literature on the refining of petroleum crude. For deciding this case, it is not necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were issued to the assessee for the period 1-8-1989 to 31-5-1991 calling upon to show cause why the duty demand be not raised on the LSHS and as to why their claim for exemption be not denied on the ground that clearance of LSHS to other associate agencies such as Gujarat Electricity Board, ONGC, State Bank of India, P T Exchange and Post Office on Nil rate of duty under Notification No. 75/84 is illegal and not admissible. According to the department condition No. 4 of the notification is not fulfilled since fuel captively consumed was for production of electrical energy not for sale but for their own consumption or for supply to their non-undertaking for which there is no execution of duty to such fuel use for generation of electricity. [Emphasis supplied] 13. In the present case as observed in the earlier paragraphs, there is no allegation that the appellant has cleared LSHS to any third parties or were marketing the product. Therefore, the decision of the Hon ble Supreme Court is distinguishable and cannot be applied to the facts of the present case. In view of the foregoing observations, we allow the appeal on merits. 14. We also find force in the appellant s argument that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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