2003 (12) TMI 109 - AT - Central Excise

Tribunal Rules Furnace Oil as Consumable, Grants Duty Exemption; Time-Barred Demand Set Aside; Appeal Allowed.

TATA TEA LIMITED Versus COMMISSIONER OF CENTRAL EXCISE, KOCHI

TATA TEA LIMITED Versus COMMISSIONER OF CENTRAL EXCISE, KOCHI - 2004 (164) E.L.T. 315 (Tri. - Del.) Issues Involved:1. Eligibility of furnace oil as a 'consumable' for duty exemption under Notification No. 1/95-C.E.2. Applicability of the larger period of limitation under the proviso to Section 11A(1) of the Central Excise Act.3. Interpretation of amendments to Notification No. 1/95-C.E. and their retrospective effect.Summary:1. Eligibility of Furnace Oil as a 'Consumable':The appellants, a 100% EOU, procured furnace oil duty-free under Notification No. 1/95-C.E. for use as fuel in boilers generating steam for manufacturing Instant Tea Powder. The department issued show cause notices demanding duty, alleging that the exemption was not available for furnace oil used as fuel. The appellants argued that furnace oil was a 'consumable' under the notification. The adjudicating authority denied the exemption, stating that a separate entry for fuel in captive power plants indicated a distinction between fuel and consumables. The Tribunal held that furnace oil used in boilers was a 'consumable' as it was eventually used up in the manufacturing process, thus eligible for exemption under Entry No. 7 of Annexure-I to Notification No. 1/95-C.E.2. Applicability of the Larger Period of Limitation:The show cause notices invoked the larger period of limitation u/s 11A(1) of the Central Excise Act, alleging intent to evade duty. The appellants contested this, arguing that their use of furnace oil as a consumable was declared and accepted by the department. The Tribunal did not find sufficient grounds to support the allegation of intent to evade duty, thus the demand for the period up to 31-12-1999 was held to be time-barred.3. Interpretation of Amendments to Notification No. 1/95-C.E.:The adjudicating authority relied on amendments made by Notification No. 31/98 and Notification No. 40/2000-C.E. to deny the exemption. The Tribunal noted that each entry in the notification should be construed independently. The amendment on 22-5-2000, which included furnace oil for all EOUs, did not retrospectively affect the status of furnace oil as a consumable. The Tribunal concluded that the legislative intent was to include furnace oil as a consumable for the relevant period, thus allowing the exemption.Conclusion:The Tribunal set aside the impugned order concerning the demand of duty for the period 1-1-2000 to 21-5-2000, allowing the appeal and confirming that furnace oil used by the appellants was eligible for duty exemption as a consumable under Notification No. 1/95-C.E.