BALLARPUR INDUSTRIES LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THE issue before this Bench relates to admissibility of Modvat credit under Rule 57A of the Central Excise Rules on fuel oils such as Low Sulphur Heavy Stock (LSHS) and furnace oil for captive generation of electricity which in turn is used for manufacture of final products of the assessees. In the case of Ballarpur Industries Ltd., LSHS and furnace oil are used in Diesel Generation Sets for generation of electricity used for electrolysis in their Caustic Soda plant. In the case of Modi Cements Ltd., furnace oil and light diesel oil are used in Diesel Generating Sets for generating electricity used for firing kilns for manufacture of cement and clinker and for maintaining constant supply of electricity in the plant. In the case of Jaypee Rewa Cement, furnace oil is used in Diesel Generating Sets for generation of electricity for manufacture of cement. In the case of Modipon Ltd., Residual Fuel Oil (RFO) is used for generation of electricity used as fuel for manufacture of synthetic filament yarn. In the case of India Glycols Ltd., Residual Fuel Oil (RFO) is used in the Diesel Generating Sets for generation of electricity for the manufacture of chemicals such as mono -ethylene glycol, Di -ethylene Glycol, Tri -ethylene Glycol, etc. In the case of Risshabh Steel Ltd., light diesel oil, furnace oil and mobile oil in the Diesel Generating Sets for generation of electricity to run the furnace in which iron and steel products such as MS ingots, etc., are produced.

(2.) AT the outset, the objection to jurisdiction of this Bench to hear the matter has been raised by Shri A.K. Jain, learned Advocate on the following grounds:

(3.) THE above objections are not tenable. One of the objects of constituting Larger Benches is conflict resolution. The existence of conflict of decisions has been held to be a rational and valid ground for the President of the Income Tax Appellate Tribunal to act in exercise of his administrative powers to constitute a Special Bench if he thought it fit to do so, by the Hon'ble Supreme Court in the case of IT AT v. Dy. CIT (Asstt.) III, Hyderabad reported in 1996 (82) E.L.T. 4 (S.C.) wherein the Court held that ITAT President can constitute a Larger or Full Bench in exercise of his administrative power under Section 255 of the Income Tax Act or on the basis of the judicial order passed by the Bench of the Tribunal making a reference to the President for constitution of Larger Bench. That the President is empowered to constitute a Larger Bench in terms of Section 129C(5) of the Customs Act cannot be, and is not questioned. The challenge to the power of the President to constitute a Larger Bench was raised before the Delhi High Court in the case of Paras Laminates P. Ltd. v. CEGAT reported in 1990 (45) E.L.T. 521 (Delhi) - the Court allowed the Writ Petition. However, the Delhi High Court judgment was reversed by the Hon'ble Supreme Court and its order reported in 1990 (49) E.L.T. 322 (S.C.). Relevant paragraphs of the Supreme Court judgment are reproduced below :