ORDER
Krishna Kumar, Member (J)
1. Shri J.C. Patel, Ld. Advocate appeared on behalf of the appellant and interalia submitted that the adjudicating authority has confirmed duty demand of Rs. 23,95,114/- and imposed an equal amount of penalty under Section 11AC on the Company and a penalty of Rs. 10,10,000/- on the Director Shri. Shakil Z.Memon. The Counsel submitted that the appellants are engaged in production and clearance of Fertilizers. In order to produce the fertilizers, furnace oil is used as fuel and the same was obtained by the Petitioners, without payment of duty under C.T.2 certificate under the provisions of Serial Entry No. 11 of the Table to the Notification 4/97-C.E. dated 1.3.97 from time to time and it was accounted for and used as fuel in production of the fertilizers. The Officers of DRI visited the appellants unit on 6.2.2002 and observed that the said furnace oil procured by the appellant under the provisions of Serial Entry No. 11 of the Table to the Notification 4/97-C.E. dated 1.3.97 under C.T.2 certificates, after having followed the Chapter X Procedures, was not eligible for the said exemption inasmuch as, only such Furnace Oil, was eligible, for the said exemption, which was to be used as Feedstock, in production of Fertilizers and not as Fuel. It is seen from the exemption Notification that the furnace oil intended for use as feedstock in the manufacture of fertilizers attracts nil rate of duty subject to the fulfillment of conditions 3 and 4 thereof. Conditions 3 and 4 are reproduced under:-
General Exemption No. 55, page 207
3. The exemption shall be subject to proving to the satisfaction of an officer not below the rank of the Assistant Commissioner of Central Excise, that such goods are cleared for the intended use specified in column (3) of the said Table.
4. Where such use is elsewhere than in the factory of production, the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed.
2. The contention of the Ld. Counsel interalia is that the expression, “Feedstock” created lot of disputes and confusions and its interpretation, was made by the various sections of judiciary, in different ways; the Hon’ble Apex Court had to intervene and define the expression, “Feedstock”, so far as the said Furnace Oil, was to be used in production of Fertilizers, was concerned and when such long term litigation took place and in which a giant company such as Gujarat Narmada Valley Fertilizers Company Ltd., was also involved, allegation cannot be made on the Petitioners that they had suppressed the use of the said furnace oil. He submitted that the decision of the Tribunal in the case of Blue Star Ltd. v. CCE – 2003 (155) E.L.T 322 (Tri.Del) maintained that when procurement of raw materials is done under C.T.3 Certificate, question of allegation of suppression of fact etc. should not arise and in the current case of the petitioners, herein, the equivalent document, such as, C.T.2, was used for procurement of, Furnace Oil, without payment of duty and therefore, the circumstances, do not warrant allegations of suppression of fact or misstatement. The matter is hit by the limitation. He also relied on the decision in the case of Fertilizer Corporation of India Ltd – 2000 (122) E.L.T. 343 (Pat.D.B.) and National Fertilizers Ltd. – 1999 (114) E.L.T. 1033 (Tri.). He, therefore, sought full waiver of the duty and penalty.
3. Shri A Chopra, Ld. JDR appeared, on behalf of the Revenue contended that on investigation it was found that the furnace oil is infact used for generation of hot air which in turn is used for drying of moisture content in rock phosphate and granulated Single Super Phosphate. So it is proved beyond doubt that furnace oil is not used as feed stock as is declared. He also referred to the decision of Apex Court in case of GNFC – 2001 (128) ELT 13 (SC) and contended that in the present case furnace oil is not used as a primary material in the manufacturing of fertilizers and as such the issue is squarely covered in favour of the Revenue and the appellant is not entitled to avail any concession as contemplated in Notification No. 4/97 dated 1.3.97 as amended. He, therefore, reiterated the order of the Commissioner and contended that the appellant should be asked to deposit the entire amount of duty and penalty as they have not pleaded any financial hardship.
4. After hearing both sides, perusal of the records and the case laws relied on, we find that the issue involved requires to be looked into in great detail by going through the legal provisions and the evidence which is not possible at this stay stage. We, find that the appellants have not been successful in making a strong prima facie case for waiver of the total duty and penalty. In these circumstances, we order the appellant to make a pre-deposit of Rs. 10 lakhs towards the duly amount by 07.06.2004 and also report compliance by the said date. On such deposit, we waive pre-deposit of balance amount of duty and penalty. It may be made clear that failure to make the deposit by the stipulated date will result in dismissal of the appeal without any further notice to the appellant.
(Pronounced in the Open Court on 22/04/2004.)