2017 (6) TMI 999

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....he petroleum products manufactured by the appellant and is used in the Gas Turbine Plant as fuel in the generation of electricity. Refinery Fuel Oil (RFO) is used as fuel to generate steam, which in turn is used in the steam turbine generator to produce electricity. The electricity so generated is used within the factory of production. However, a part of the electricity is wheeled out to the T.N.E.B. The demand has been raised by Revenue for denying the benefit of captive consumption Notification No.67/95-CE dt. 16.03.1995 for the portion of Naphtha/RFO attributable to the electricity wheeled out to TNEB. Hence the Central Excise duty has been demanded in proportion to the quantum of electricity wheeled out . 2. With the above background....

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....manufactured in the appellant's factory and captively consumed in the generation of electricity. It is further on record that a part of such electricity generated by the captive power plant is wheeled out to T.N.E.B. The lower authorities have held that the appellant will not be eligible for exemption under the above notification in respect of the portion of Naphtha attributable to that used for generation of electricity wheeled out. The demand originally raised and confirmed by the adjudication authority in the impugned order has been worked out on proportionate basis to the quantity of electricity wheeled out. It is settled position of law that in cases where electricity generated by the captive power plant is wheeled out, the bene....

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....s of naphtha have a bearing on the marketability of such products. Even now, they have not furnished any information about the material characteristics of the so-called different varieties. They have failed to furnish the technical data and the composition of the naphtha used captively vis-a-vis the supplies made out side but merely making a bald assertion that the products are different. I am at a loss to understand as to why the naphtha used captively cannot be regarded as commercial grade. Only because the assesse did not choose to sell the naphtha but used the same for production of electricity does not necessarily mean it is a non-commercial grade. The naphtha in question is being used as fuel in the gas turbine to produce electricity.....