TaxTMI 
TaxTMI 
2002 (11) TMI 648
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....shmikumaran, learned Advocate submitted that the appellants manufacture various excisable goods; that in one of the Division, they manufacture fertilizer; that they have installed captive power plant as under catering to the power requirement of their factory :- Plant Number of Firing arrangement Fuel Boilers Turbines 35 2 1 Pulverized Coal Coal (Furnace Oil as supportive fuel) MW Tangentially Fired 30 MW 2 1 Atmospheric Fluidized Bed Combustion Coal 10 1 1 Atmospheric Fluidized Coal MW Bed Combustion 10.3 0 1 -- -- MW 2.2 He furthe....
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....ordingly the power generated from the furnace oil cannot be proved to be intended for use in the manufacture of fertilizer only. 3.1 The learned Advocate submitted that the furnace oil is capable of being used only in the 35 MW Power plant which has been catering to the power requirement of fertilizer plant ever since 1991; that the total power requirement of the various plants are as under : Plant Power Requirement - MW Fertilizer and Power Plant      40.0 Caustic Soda - Cell House      15.8 Aux. + Projects       2.3 Cement       3.8 PVC       2.7 Carbide-Furnace &ems....
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....ification in respect of raw naphtha used in Naphtha Reforming Plant for keeping it continuously running so that Ammonia Plant could be switched on immediately upon resumption of power. Reliance has also been placed on the decision in the case of Tata Chemical v. CCE, Surat, Final Order No. 418/99-C, dated 21-5-1999. He also relied upon the decision in the case of Indian Farmers Fertiliser Coop. Ltd. v. CCE, Ahmedabad, 1996 (86) E.L.T. 177 (S.C.) wherein the benefit of notification was allowed though the raw naphtha was used to produce ammonia which in turn was used in off-site plants namely water treatment plant, steam generation plant, inert gas generation plant and effluent treatment plant. The Court observed that there is no good reason ....
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.... known to the Department; that the existence of a common grid was a fact that was ipso facto known once the power plant was visited by the officers. 4. Finally he submitted alternatively that if duty on furnace oil is payable, the said duty is available as Modvat credit. He relied upon the decision of the Larger Bench of the Tribunal in the case of Jay Yushin Ltd. v. CCE, New Delhi, 2000 (119) E.L.T. 718 (T) wherein it has been held that as far as Revenue neutralization exercise is concerned, the said benefit is available if the assessee is able to demonstrate with reference to the Modvat credit available to himself. He also mentioned that imposition of penalty under Section 11AC of the Central Excise Act is incorrect as the period ....
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....ty on furnace oil intended for use otherwise than as feed stock in the manufacture of fertilizers is available subject to the following conditions - (a) that it is proved to the satisfaction of an officer not below the rank of the Assistant Commissioner of Central Excise having jurisdiction that such good are cleared for intended use; (b) where such use is elsewhere than in the factory of production, the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed. 7. It is not in dispute that the appellants have followed the procedure set out in Chapter X. The benefit of the notification has been disallowed as the power generated by using the fertilizer has not ....
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....nufacturing various products including fertilizer. The element of direct use, no doubt, is not there as certainly power generated by different Power Plant is pooled. But the fact remains that fertilizer has been manufactured. The Revenue also cannot say that only the power generated by other Power Plants has been utilized for manufacture of fertilizers. Thus the requirement of notification that the furnace oil is "intended for use otherwise than as feed stock in the manufacture of fertilizers" has been complied with by the appellants. The Apex Court in the case of Steel Authority of India has interpreted the expression "intended for use." The Court has held that "the exemption notification required proof that the raw naphtha was "intended f....