Customs, Excise and Gold Tribunal - Delhi
Uniworth Textiles vs Commissioner Of Central Excise on 29 November, 2002
Equivalent citations: 2003(159)ELT183(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. The appellant is a 100% Export Oriented Unit (E.O.U.) engaged in the manufacture of textile fabrics (for export). Their unit is located at Raipur. As an E.O.U., they are entitled to procuring equipment and materials required for export production, duty-free, both customs and excise. They procured 1848 Kilo Litres of furnace oil from M/s. Indian Oil Corporation Ltd., Mumbai without payment of duty, claiming exemption [Notification No. 1/95 dated 4-1-95]. The furnace oil so procured was sent to M/s. Uniworth Ltd., another E.O.U. located in the appellant's neighbourhood. That EOU has a captive power plant. Further, the appellant has been permitted to obtain electricity generated in that power plant of M/s. Uniworth Ltd. The aforesaid furnace oil procured without payment of duty by the appellant was sent to M/s. Uniworth Ltd. and utilized therein for manufacture of electricity supplied to the appellant. In the impugned order Commissioner of Central Excise, (Appeals) Raipur held that Notification No. 1/95 did not permit the appellant to procure furnace oil without payment of duty. The reason for holding so is that fuels are allowed duty free under the Notification only for captive power plants and not for other units. The appellant did not have a captive power plant. Therefore, they were not entitled to the exemption.
2. The appellant's contention is that they were entitled to procure duty free, inter alia, "consumables" under Sl. No. 7 of the Annexure to the Notification 1/95. The appellant also submits that it is well settled that fuels are consumables and are, therefore, entitled to be procured duty free.
3. Goods eligible for exemption are the goods listed in the annexure to Notification No. 1/95. The Revenue's contention is that goods covered by the annexure to the notification are the goods required in connection with the manufacturing activity undertaken by each EOU. The learned SDR contends that, construed in that manner, the term 'consumables' occurring in the Notification covered only the consumables required for production in the factory of an E.O.U. Since the appellant did not have a captive power plant it could not obtain fuel. Ld. D.R. also referred to goods specified under Sl. Nos. 3, 3B and 3C of Annexure-I to the Notification and stated that these separate entries for captive power plants, fuel for captive power plant and furnace oil required for boilers showed that wherever exemption was sought to be given for fuels and furnace oil, they have been separately provided. According to him it followed that 'consumables' mentioned at Sl. No.7, even when taken as including furnace oil, covered only consumables required for use in the production in appellant's factory and not consumables required for running the manufacturing units established by others. He also pointed out that, if the extended scope, as sought by the appellants is allowed, it will lead to a situation where an E.O.U. can procure duty free, furnace oil and send it to any electricity producer for generating electricity. The ld. SDR submitted that the notification did not have such unlimited scope. The ld. DR further pointed out that the correct course for an E.O.U. was to claim reimbursement of duty paid on fuels from DGFT authorities.
4. It is clear from a perusal of the relevant notification that an E.O.U.'s entitlement to duty free import of materials is in respect of goods required for its own manufacturing activities. The appellant is a manufacturer of textile fabrics and he does not have his own captive power plant. Generation of electricity is a separate manufacturing activity. The entitlement for duty free import of fuels for power plant would lie with the owner of the captive power plant and not the consumers of electricity from that power plant. Therefore, even while accepting that the provision for procurement of 'consumables' covered fuel oil, it has to be held that the appellant would not be entitled to procure any fuel oil for use in the captive power plant of another unit. This position is clear from entry 3 to 3C as pointed out by the ld-SDR. Sl.No.3 permits procurement of captive power plants, Sl. No. 3B permits fuels for captive power plant. Similarly, Sl.No.3C permits procurement of furnace oil for use in boilers. In the face of these entries, notification cannot be interpreted so as to provide for import of unlimited quantities of furnace oil or fuels by any EOU for supply to power plants of other manufacturers in terms for Sl.No.7 for 'consumables'. The availability of alternate scheme for reimbursement of excise duty paid on fuels by the Ministry of Commerce also goes in support of this interpretation.
5. In view of what has been stated above, we are not able to accept the appellant's submission that he is entitled to duty free procurement of furnace oil for supplying to a captive power plant owned by another manufacturer. Accordingly, the appeal is rejected.