Prima facie waiver of pre-deposit granted for residual fuel gas transfer used to generate power and steam.

Removal of residual fuel gas to a sister unit for generation of electricity and steam was treated as substantially similar to an earlier case involving partially processed naphtha, where duty had been held not payable and compliance with the excise and CENVAT procedure was accepted. On that basis, the Tribunal found a prima facie case for complete waiver of pre-deposit of duty and penalty. It also recorded that the appellant had disclosed the relevant facts to the Department, so extended limitation and penalty could not be sustained at this stage. Recovery of the adjudged dues was stayed pending appeal.

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Issues: Whether the appellant had made out a prima facie case for waiver of pre-deposit of duty and penalty in relation to removal of residual fuel gas to a sister unit for generation of electricity and steam.

Analysis: The demand arose from removal of residual fuel gas generated during cracking of naphtha to another unit in the same factory premises for conversion into electricity and steam, which were then used in the manufacture of final products. The Tribunal noted that in the appellant's own earlier case, on materially similar facts involving partially processed naphtha sent for the same purpose, it had been held that duty was not payable and that the assessee was entitled to follow the procedure under the relevant excise and CENVAT credit rules. The Tribunal found the present case to be substantially on the same lines and also noted the appellant's contention that the relevant facts had already been disclosed to the Department, making invocation of extended limitation and penalty untenable at this stage.

Conclusion: The appellant had established a prima facie case for complete waiver of pre-deposit, and recovery of the adjudged dues was stayed during pendency of the appeal.

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