2006 (4) TMI 361

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....ngalore. (ii)    E/531/2004 against the OIO No. 4/2003-04 dated 26-2-2004 passed by the Commissioner of Central Excise, Mangalore. 2.  The appellants M/s. Mangalore Refinery & Petrochemicals Ltd. (MRPL) refine Crude Petroleum and obtain various petroleum products. Low Sulphur Heavy Stock (LSHS) is one of them. LSHS is used for the generation of steam and in turn the steam is used for generation of electricity. The electricity is captively consumed in the refinery. However, a small portion of the electricity generated is diverted to the residential colony of the appellant. The dispute is whether the LSHS utilized for generation of electricity diverted in the above manner would be entitled for exemption from duty vid....

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.... specification of the intermediary product is different from the specification of the finished product LSHS which is being marketed. The specification of LSHS to be marketed is prescribed by ISI (IS 11489-85). (iv)   The adjudicating authority erred in ignoring this important and vital aspect and held that the impugned product is excisable on the ground that the appellant had filed Classification Declarations claiming exemption vide Notification 67/95 dated 16-3-1995. There is no estoppel in law just because a classification was claimed and if it could be established legally, technically and commercially that the so called LSHS was not a marketable product and, therefore, the same could not be subjected to excise duty. (v)&n....

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....led LSHS as fuel in the Refinery. The non-payment of excise duty was because of the bona fide belief that on a true and proper interpretation of the Notification 67/95, the appellant was not liable to pay duty on the impugned goods. Hence, the charge of suppression or wilful evasion of duty is not sustainable and, therefore, extended period cannot be invoked. (x)     In view of the above submissions, the imposition of penalty under Rule 173Q of the erstwhile Central Excise Rules, 1944 is not proper as there was no contumacious conduct on the appellant. The following case-laws were relied :- (a)      Hindustan Steel's case - 1978 (2) E.L.T. (J159) (S.C.) (b)      ....

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....he case relied on by the learned SDR and hence, the same is not relevant in deciding the excisability of the impugned product. 6.  We have gone through the records of the case carefully. We agree with the learned Advocate that the Madras Refineries Ltd. case, relied on by the Revenue, may not help us in deciding the excisability of the impugned product, as that question was not raised in that case. The appellants have furnished detailed technical literature on the refining of petroleum crude. For deciding this case, it is not necessary to describe the entire process of refining. Suffice it to say that while processing Low Sulphur Crude, say Bombay High Crude, the Short Residue (SR) produced in the Vacuum Distillation Unit (VDU) is c....