2000 (12) TMI 382

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....dara disposing of two appeals before him. 2. The appellant is a manufacturer of hot briquetted iron and hot rolled steel coils in its mill at Hazira in Gujarat. In order to obtain the electricity required for running the steel mill, the appellant set up a subsidiary company M/s. Essar Power Limited (EPL for short), adjacent to the steel mill. The entire electricity generated by EPL is transmitted through the steel plant; some of it is utilised in the steel plant, the remaining being transmitted to the grid of the Gujarat State Electricity Board. EPL generated the electricity by means of turbines, which were fuelled by Natural Gasoline Liquid (NGL for short) and naphtha, purchased and supplied by the appellant. The appellant had decl....

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....er (Appeals) also relied upon what he said were the Tribunal's views, that an intermediate product must necessarily emerge out of the raw material in the course of the processes to which it is subjected in the factory of production. The other two appeals were decided by Commissioner (Appeals), Surat. That Commissioner (Appeals) took a different view. He found that clause (d) of the Explanation to Rule 57A did not provide that, for an input used to generate electricity to be considered to be an input, it was necessary that electricity should be used within the factory of production. He said that any input used in or in relation to the manufacture of final product could be an input. He found the essence of the scheme to allow the credit of fu....

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....se (d), would have the same meaning, in the absence of anything to suggest the contrary. In other words "the factory of production" referred to in clause (d) is the factory of production, not of the electricity, but of the final product. This is the view that has also been taken by the Tribunal in Ballarpur Industries Ltd v. CCE - 2000 (116) E.L.T. 312. In the second paragraph numbered 7 of the order (there are two paragraphs with the same number), the larger bench said, "Therefore, while the non-fuel input could not be covered by clause (d) to Explanation to Rule 57A, inputs used for generation of electricity covered by clause (d) introduced on 16-3-1995. This, according to us, is the true scope of the first Explanation of clause (d). The ....