Strict compliance with exemption conditions denied captive power plant relief, while limitation and penalty challenges also failed.

Exemption under Notification No. 53/97-Cus was held to depend on strict compliance with the condition that furnace oil be used in the assessee's own captive power plant for manufacture of export goods; because the oil was supplied to another concern instead, the exemption was unavailable. The duty demand was not time-barred, as the record did not establish prior departmental knowledge that the assessee had no captive power plant, and a later letter was insufficient to prove such awareness. The penalty was also upheld as not excessive, since it was modest relative to the duty demand and no basis for interference was shown.

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Issues: (i) Whether the benefit of Notification No. 53/97-Cus dated 3.6.97 was available in respect of furnace oil not used in the assessee's captive power plant but supplied to another concern; (ii) whether the demand of duty was barred by limitation; and (iii) whether the penalty imposed was excessive.

Issue (i): Whether the benefit of Notification No. 53/97-Cus dated 3.6.97 was available in respect of furnace oil not used in the assessee's captive power plant but supplied to another concern.

Analysis: The notification granted exemption to specified goods, including fuel for a captive power plant, when used for manufacture of export goods. The exemption was confined to use in the assessee's own captive power plant. Since the furnace oil was not used in such plant and was instead supplied to another unit, the condition of the notification was not satisfied.

Conclusion: The benefit of exemption was not available to the assessee.

Issue (ii): Whether the demand of duty was barred by limitation.

Analysis: The record did not show any material establishing departmental awareness, prior to the relevant period, that the assessee had no captive power plant. A subsequent letter could not by itself prove such prior knowledge.

Conclusion: The demand of duty was not barred by limitation.

Issue (iii): Whether the penalty imposed was excessive.

Analysis: The penalty was modest compared with the duty demand and no ground was made out to interfere with that quantum.

Conclusion: The penalty was not excessive.

Final Conclusion: The exemption claim failed, the limitation defence was rejected, and the penalty was sustained, leaving no reason to interfere with the order under challenge.

Ratio Decidendi: Exemption under a fiscal notification is available only when the specified condition of use is strictly satisfied, and limitation cannot be defeated without evidence of prior departmental knowledge.

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