THIRD MEMBER ON REFERENCE : SHRI T. ANJANEYULU, MEMBER (J) FINAL MAJORITY ORDER BY : MS. ARCHANA WADHWA, MEMBER (J) AND SHRI M. VEERAIYAN, MEMBER (T) ARVIND MILLS LTD. Vs. COMMISSIONER OF C. EX., AHMEDABAD-III

JUDGEMENT

(1.) APPELLANTS are engaged inter alia in the manufacture of cotton yarn, processed cotton fabrics, processed man -made fabrics at their Naroda factory. They are also using naphtha, as fuel, in gas turbine for generation of electricity. A part of the electricity so generated is captively consumed in the manufacture of final product and part of electricity so generated is wheeled out to Ashok Spintex factory, which is owned by the appellants. The electricity wheeled out to Ashoka Spintex factory is used in the manufacture of finished product in that factory.

(2.) IN the case of Shantej factory, fuel is used is received in gas turbine for generation of electricity, the electricity so generated is captively used and a part of the same is cleared to the factory of M/s. Arvind Products. The steam so generated is used in steam turbo generator set within the factory in the manufacture of finished goods, which are exempt from duty. The appellants had taken credit on the entire naphtha used as fuel in gas turbine and had been reversing credit taken on that quantity of naphtha used as fuel for generation of electricity wheeled out of the factory for the period prior to and after 1 -4 -2000. Further, the appellants had been reversing the credit on fuel, proportionately in respect of steam used in exempted finished goods manufactured in the Santej factory. The appellants had discontinued such reversal with effect from May -2001, they informed the department with a note attached to the monthly return for the month July -2001. The appellants had been paying 8% of the sale price of the steam cleared from the factory.

(3.) AFTER hearing both sides, and considering the matter, these two appeals are being disposed of by this common order, after finding and holding :