2004 (1) TMI 162

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....ture of both dutiable and exempted final products. The department issued show cause notice to deny the benefit of Modvat credit on these two items which are used as inputs in HSO plant for generation of electricity which was in turn used in the manufacture of both dutiable and exempted final products. However, the Commissioner (Appeals) after due consideration allowed the claim by relying on the judgment of the Tribunal rendered in the case of National Engg. Ind. Ltd. v. CCE, Jaipur [2002 (150) E.L.T. 161 (Tribunal) = 2002 (102) ECR 808] and that of Navsari Oil Products v. CCE, Surat reported in 2003 (107) ECR 22. The findings recorded by the Commissioner is extracted herein below :- "I have carefully gone through the facts and circumsta....

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....he Rule 6 will not be applicable and they are eligible for the credit. I find force in their argument. In the case of Indore Steel & Iron Mills Ltd. v. CCE, Indore, the Hon'ble Tribunal vide Final Order No. A/176/2002/NB (SM), dated 4-2-2002, had held the following view : "The appellants are availing Modvat credit on the use of furnace oil as fuel in their factory. They are manufacturing wire rods from billets. A part of the wire rods is cleared without payment of duty in terms of provisions of Rule 57F(4). The other part is cleared on payment of duty. The question is whether the appellants are required to reverse the Modvat credit/pay duty proportionate to the furnace oil used in the manufacture of wire rods cleared without payment of d....

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....e credit taken on furnace oil used for the generation of electricity and steam used in the manufacture of non-dutiable item also. In the present case, the appellants are using furnace oil/LSHS as a fuel in the manufacturing process of both duty paid and non-duty paid end products and since the fuel is specifically excluded from the operation of the provisions of Rule 6 of CCR, there is no recovery to be made from the appellants in respect of furnace oil/LSHS used by them in the manufacture of the goods cleared without payment of duty. Since they are eligible for credit, imposition of penalty and demand of interest are set aside. In view of the above discussion, I allow the appeal and set aside the order passed by the lower authority." ....