2006 (7) TMI 561 - AT - Central Excise

Tribunal Upholds Duty Exemption for Naphtha Supply to Power Plants

BPCL Versus COMMISSIONER OF C. EX., MANGALORE

The Tribunal ruled in favor of the appellant, holding that duty liability on naphtha supplied to power plants post withdrawal of warehousing facility was ... benefit of Notification No. 6/2002-C.E. cannot be withdrawn Issues:1. Interpretation of duty liability on withdrawal of warehousing facility for naphtha supplied to power plants.2. Applicability of exemption notifications and circulars in the case.3. Consideration of facts and law in relation to the duty liability issue.Analysis:1. The case involved a dispute regarding duty liability on naphtha supplied to power plants after the withdrawal of the warehousing facility. The Revenue contended that duty exemption for naphtha would not be applicable post withdrawal, relying on a Supreme Court ruling and the principle of duty discharge upon expiry of warehousing period. However, the appellant argued that the exemption notification granting duty waiver was still in force, citing Circular No. 796/29/2004-CX. The Tribunal noted that the naphtha was cleared to a power plant specified in List-I of Notification No. 6/02, and found no basis for duty liability solely due to the withdrawal of the warehousing facility.2. In analyzing the applicability of exemption notifications and circulars, the Tribunal observed that the impugned order failed to consider Circular No. 796/29/2004-CX, which clarified that exemptions continued despite withdrawal of the warehousing facility. The appellant's submission that the notification granting duty waiver was not rescinded and that the naphtha was supplied to a specified end customer in accordance with the notification was upheld. The Tribunal emphasized that the mere withdrawal of the warehousing facility did not automatically trigger duty liability when the exemption notification was still valid.3. After carefully considering the submissions and records, the Tribunal concluded that the demands for duty recovery on naphtha supplied to the power plant were unjustified. The Tribunal found no legal basis for imposing duty liability solely based on the withdrawal of the warehousing facility, especially when the exemption notification remained in force. By setting aside the demands, the Tribunal upheld the appellant's position that duty exemption continued to apply, and the impugned order confirming the duty demand was deemed without merit.This detailed analysis highlights the key legal arguments, interpretations of relevant notifications and circulars, and the Tribunal's reasoning in overturning the duty demands based on the withdrawal of the warehousing facility.