HALDIA PETROCHEMICALS LTD. Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THIS order disposes of two appeals filed by M/s. Haldia Petrochemicals Limited relating to the question of eligibility of Cenvat credit on inputs used for the generation of steam and electricity during the period November, 2000 to October, 2002. One appeal is against the order of the Commissioner (E/4001/04 -A) and the other against the order of the Commissioner (Appeals) (E/4201/04 -A).

(2.) THE brief facts of the case are that M/s. Haldia Petrochemicals Limited (hereinafter referred to as the 'appellant') is a Public Limited Company promoted by the West Bengal Government through the West Bengal Industrial Development Corporation, which had set -up a petrochemical complex at Haldia, comprising (a) Naphtha Cracker Unit (NCU) and (b) Associated Downstream Units for producing HDPE, PP, LLDPE, etc., which consume the products manufactured by the NCU. The principal raw material for manufacture of petrochemical products is Naphtha which is procured from Indian Oil Corporation or other indigenous oil refineries or by direct imports from overseas, on payment of duty. A small portion of the Naphtha, either as such, or after being partially processed (internally known as CLS comprising NRS/Py Gas/C -6 Raffinate, etc.), is also sent to a power plant for generation of electricity or steam, which are in turn used for production of the final products within the appellant's factory.

(3.) THE production in the petrochemical complex commenced sometime in the year 2000. Before the commencement of the operations of the petrochemical complex, the appellant wrote a letter dated 16 -11 -99 to the Commissioner of Central Excise and Customs, giving the background of the setting up of the petrochemical complex at Haldia and indicating the basic facts regarding its operations. Certain approvals were also requested for in this letter, such as (i) permission to warehouse Naphtha in a bonded warehouse without payment of duty, (ii) mixed bonding for both Central Excise and Customs, (iii) computation of assessable value for Excise/Customs duty in case of mixed bonding, (iv) storage of duty paid Naphtha. This letter also stated that the Naphtha, which had been procured in bulk, would be pumped from the appellant's storage tank either to its manufacturing unit or to the power plant; that the electricity generated by the power plant will be used within the appellant's factory; similarly, the steam generated will also be utilized within the appellant's factory, where it will be mixed with feedstock and Naphtha for cracking. The letter sought confirmation that the appellant will qualify for Modvat benefit both in respect of (a) Naphtha used as input for manufacture of the petrochemical products in its factory, and (b) Naphtha used as input for generation of electricity and steam in the power plant, which in turn would be used in the manufacture of petrochemical products by the appellant in its factory.