Jyoti Balasundaram, Member (J)

1. The appellant Company has two units located at Kumarapatnam (Karnataka), one known as Harihar Polyfibres established in 1972 for the manufacture of Rayon Grade Wood Pulp and Grasilene Division in 1977 for the manufacture of viscose staple fibre. For the purpose of manufacturing pulp and man-made fibres the appellant had installed three boilers for generation of steam in the premises of Grasilene Division. The steam generated from one of the boilers is exclusively utilised by Harihar Polyfibres while the steam generated in the other two boilers is consumed in the Grasilene Division.

2. Two show cause notices were issued (one on 11-10-83 for the period from 1-3-1982 to 31-8-1983 and one on 7-1-1984 for the period from 1-9-1983 to 23-11-1983) for demand of duty in respect of steam generated from the boilers. The Asstt. Collector accepted the contention of the appellant, that exemption under Notification 118/75-C.E., dated 30-4-1975 was available in respect of the steam generated from the boilers and captively consumed, and dropped the proceedings by order dated 11th June 1984. The Department preferred an appeal against this order on the ground that