Captive use exemption for char/dolochar used in mixed electricity generation upheld; duty demand was found untenable.

Char/dolochar emerging in the manufacture of sponge iron and used captively for electricity generation was held eligible for exemption under Notification No. 67/95-CE on the facts of the unit's power system. The Tribunal found that generation was not based solely on char/dolochar, because two boilers operated on waste heat recovery from sponge iron kiln gases and only one boiler used solid fuels such as coal and char/dolochar to produce steam. The demand to deny exemption was therefore untenable. The Tribunal also noted that an earlier decision in the respondent's own case had treated char/dolochar as not liable to excise duty, following the Supreme Court ruling relied on by the assessee.

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Issues: Whether char/dolochar emerging in the manufacture of sponge iron and used captively for generation of electricity was entitled to exemption under Notification No. 67/95-CE.

Analysis: The Tribunal noted that the electricity generation system in the respondent's unit was not based solely on char/dolochar. Two boilers operated on waste heat recovery from sponge iron kiln gases, while only one boiler used solid fuels such as coal and char/dolochar to produce steam. On the facts, the demand to deny exemption was found untenable. The Tribunal also noted that the respondent's own case had earlier held char/dolochar not liable to excise duty in light of the Supreme Court's ruling relied upon by the assessee.

Conclusion: The exemption was upheld and the demand of duty on char/dolochar failed.

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