Refinery gas used captively for power generation was held not marketable, so excise demand and penalty were set aside.

Refinery gas used captively for generating steam and power in the refinery and township was held not to be a marketable manufactured product liable to central excise duty. The Tribunal relied on its earlier decision on identical facts in the assessee's own case, along with the Board's prior view that such refinery gas was not a manufactured product, and applied the same reasoning here. As the departmental representative did not dispute the earlier ruling, the duty demand and penalty were set aside.

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Issues: Whether refinery gas used partly for generation of electricity in the refinery and township was a marketable manufactured product liable to central excise duty, and whether the demand and penalty were sustainable.

Analysis: The refinery gas in question was being utilised captively for generation of steam and power. On identical facts in the assessee's own case, the Tribunal had held that the goods were not marketable and could not be treated as a manufactured product, particularly when the Board itself had earlier considered such refinery gas not to be a manufactured product and had dealt with it in Circular No. 246/80/96-CX dated 01.10.96. The same reasoning applied here, and the departmental representative did not dispute the earlier decision.

Conclusion: The duty demand and penalty were not sustainable and were set aside in favour of the assessee.

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