ORDER
Jyoti Balasundaram, Member (J)
1. The above appeals involving identical issue arising out of Order-in-Original No. 70/CH.27/Commr/2003 dated 8.8.2003 passed by the Commissioner of Customs and Central Excise, Raipur, by which the demand of excise duty of Rs. 8,92,913 has been confirmed together with interest and penalty of Rs. 2,00,000 has been imposed and Order-in-original No. 77/Cus/Commr/2003 dated 28.8.2003 by which the demand of duty of Customs of Rs. 98,77,725 has been confirmed together with interest (Basic Customs Duty Rs. 53,73,466 plus Auxiliary Customs Duty Rs. 1,06,140 plus Additional Customs duty Rs. 40,75,876 plus Special Additional Customs Duty Rs. 3,22,243) and penalty of equal amount has been imposed. The appeals involve identical issue and are hence taken up for hearing together and disposed of by this common order.
2. Appellants herein are a 100% Export Oriented Unit (EOU) engaged in the activity of generation of electricity for which they availed the benefit of duty free procurement of raw materials, consumables etc. under Notification No. 13/81-Cus dated 9.2.81 superseded by Notification No. 53/97-Cus dated 3.6.97 as amended and Notification No. 1/95-CE dated 4.1.95 as amended. The Power Division was established for the purpose of generation and supply of uninterrupted power to M/s. Uniworth Ltd., (Wool Division) and M/s. Uniworth Ltd. (Dyeing Division) and also to M/s. Uniworth Textiles Ltd. The Wool Division manufactures worsted spun yarn, pure wool yarn and the Dyeing Division is engaged in the dyeing of the yarn and M/s. Uniworth Textiles Ltd. is engaged in the manufacture of wool worsted fabric. The appellants were granted permission for setting up a power plant of 12 MW for captive use as well as for supply of power to Uniworth Textiles Ltd. which is also a 100% EOU. The power Division supplied power to their Silk Division (a DTA Unit) from November 1995 which was earlier receiving power from Madhya Pradesh Electricity Board till 1.2,96. The appellants’ requirement of furnace oil which is fuel for generation of electricity through generating set was met through M/s. Caltex Oil India Pvt. Ltd. and M/s. Coastal Wartsila Petroleum Ltd. as well as from petroleum companies such as M/s. IOC Ltd., M/s. Hindustan Petroleum Corporation Ltd. and M/s. Bharat Petroleum Ltd. The imported furnace oil was obtained without payment of customs duty in terms of Notification 53/97 dated 3.6.97 and furnace oil from indigenous sources was obtained both without payment of Central Excise duty in terms of Notification No. 1/95 dated 4.1.95 and also through purchases from the open market (on which duty was paid). Exemption from levy of customs duty under Notification No. 53/97 dated 3.6.97 is available to a 100% EOU only when specified goods imported into India for manufacture of goods which are either exported out of India or supplied to other 100% EOU as provided for under the EXIM Policy. If anything produced out of goods imported by a 100% EOU is used in any other industrial enterprise which is not a 100% EOU itself, then excise duty leviable under Section 3 of the Central Excise Act has to be charged and recovered. However, if the resultant goods are non-excisable then transfer of such non-excisable goods manufactured out of goods imported by a 100% EOU to non-EOU entails recovery of customs duty involved on the imported goods. Since furnace oil imported by the appellants herein was used in the generation of electricity (a non-excisable commodity} for supply and use to DTA Unit i.e. Silk Division, contrary to the terms and conditions of the Notification, Department issued a show cause notice proposing recovery of duty on furnace oil used in the generation of electricity supplied to Silk Division. Separate demand was raised under another show cause notice for recovery of Central Excise duty on furnace oil used in the generation of electricity supplied to Silk Division. Notices were adjudicated by two separate orders confirming demands and imposing penalties as set out in the opening paragraph of this order. Hence, these appeals.
3. We have heard both sides. We find that the issues in dispute, namely, admissibility of the benefit of Customs Notification as well as Central Excise Notification were considered by the Tribunal in the case of Hanil Era Textiles Ltd. and Ors. v. CCE & C, Raigad, 2004 (61) RLT 682 wherein it was held that benefits of the notifications both customs and central excise were available to fuels and lubricants used for generation of electricity for captive use in 100% EOU even though a part of the electricity was sold to a third party (non-100% EOU). The Tribunal held that there is no requirement in the Notification that the power generated should be exclusively or wholly used captively for export production and that there was no evidence to show that the appellants planned to import DG Sets of higher capacity for power generation; there was no proof of excess consumption of fuel or lubricant apart from using electricity in their factory. The earlier order of the Tribunal in Indian Chrome Charge Ltd., 2001 (46) RLT 828 upheld by the Supreme Court in Civil Appeal D.No. 1317/2002 dated 28.3.2003 was relied upon. In the present case also there is no evidence of planned imports of furnace oil or procurement of furnace oil locally in excess of the requirement for supply to 100% EOU. The ratio of the above order is, therefore, applicable on all fours to the facts of the present case and following the ratio thereof, we hold that the demand of duty and penalty arc unsustainable and accordingly we set aside the impugned orders and allow the appeals.