Customs, Excise and Gold Tribunal - Mumbai
Reliance Industries Ltd. vs Commissioner Of Central Excise And ... on 25 July, 2003
ORDER
Gowri Shankar, Member (Technical)
1. The appellant, engaged in the manufacture of plastic raw material also had a plant in its factory engaged in the co-generation of electricity and steam. The raw material utilised in this plant consist either of naphtha natural gas or high speed oil. The appellants took credit of the duty paid on naphtha; at the relevant time high power diesel and natural gas were not notified as inputs duty paid on which can be taken as credit. Part of the electricity that was generated in the plant was not utilised for the manufacture of the finished goods or for any purpose specified in the notification, but was fed into the grid of the Gujarat Electricity Board. The total quantity so fed into the grid can be further subdivided to quantity which leaked into the grid. This, it was explained, was because at certain time electricity generated was higher than minimal power and since it would not be stored it was run into the grid. The rest of the electricity was sold by the appellant to the Gujarat Electricity Board during the month of September 2000. In the order impugned in the appeal, the Commissioner has demanded duty on the naphtha which he says was used in the generation of both these quantities of electricity. As regards the quantities of electricity wasted, he has demanded only duty on that quantity of electricity which is notionally attributable to the quality generated by use of naphtha. As to the other, he has demanded duty on the entire quantity without proportional allocation.
2. In its decision in Essar Steel Ltd. in appeal E/1588/02, the Tribunal was concerned with similar quantity of electricity fed as unutilised by the electricity plant of Essar Gujarat Ltd. by the Gujarat Electricity Board. Relying upon the judgment of the Supreme Court in SAIL v. CCE 1997 (68) ECR 43 and the Tribunal in Inalsa Ltd. v. CCE 1997 (97) ELT 417, the Tribunal concluded that such electricity would have to be considered waste since it could not be utilised due to unavailable circumstances, and held that credit taken on the duty paid on naphtha used to produce such electricity was not required to be reversed. It also noted the existence in Rule 57D of a clause which took note of inputs which have become waste in relation to manufacture of final product. The departmental representative is not able to say why the ratio of this decision should not apply. There is therefore no basis for ordering reversal of the credit in the case of such electricity.
3. The contention of the counsel for the appellant with regard to the sale of electricity is that the total quantity that was sold has not been shown to have been produced by utilising naphtha. He contends that the quantity of electricity sold was a small proportion, of 15% or so of the electricity that was generated by utilising natural gas or high speed diesel oil and since no credit was taken with regard to the substances, there is no basis for the reversal of the credit ordered by the Commissioner. It is no doubt true that it cannot be said that the electricity that was sold was generated out of any specific fuel. The position is that the electricity was being generated simulateneously in three turbines, each of which had one of the three kinds of fuel. Such electricity was transmitted by one set of wires. Therefore it is not possible to identify the quantity of electricity that was sol to the electricity board as having been generated in any one or more of the three turbines and by use of any specific fuel. It would be physically impossible to come to a definite conclusion either way. In that situation, we think it appropriate to demand for credit to be limited to the quantity of electricity that would be notionally said to have been manufactured out of the naphtha. The matter remanded to the Commissioner solely for credit reversal by so doing.
4. The appeal is accordingly allowed and the impugned order set aside. Consequential relief.