Per V.K. Ashtana :

These appeals are against four Orders-in-Appeal Nos. 47/95 dated 17.8.95 passed by the Commissioner (Appeals) and 6/98,7/98 and 8/98 all dated 23.1.98 also passed by the Commissioner (Appeals), which had considered Order-in-Original No. 6/95 dated 22.2.95 and Orders-in-Original No. 10/96 etc. dated 5.11.96 respectively.

2. The Order-in-OriginalNo. 6/95 (supra) finalised the provisional assessments on the following products manufactured by the appellants and cleared for captive consumption :-

(a) Naphtha

(b) LSHS;

(c) Fuel Oil; and

(d) Refinery Gases

The appellants had claimed Central Excise duty exemption under Notification No. 217/86 dated 2.4.86 as amended by Notification No. 61/94 dated 1.3.94 which had also introduced exemption to goods falling under Chapter 27 of the Central Excise Tariff Act, 1985 with effect from 1.3.94. The said order also deals with exemption claimed for Naphtha removed for flushing the pipelines and for which duty exemption was claimed under the same Notification.

3. The Order-in-Appeal No. 47/95 impugned deals with the classification dispute i.e. availability or otherwise of the duty exemption noted above, while the Orders-in-Appeal Nos. 6/98,7/98 and 8/98 deal with the demands quantified in terms of the Order-in-Appeal No. 47/95 and a number of show-cause notices issued quantifying the same. In the Order-in-Appeal No. 47/95, the appellants claim for exemption for LSHS, Fuel Oil and Refinery Gases which were captively consumed to first produce steam, which in turn was used in the manufacture of the petroleum products falling under Chapter 27 was allowed. Further, the appellants claim for exemption on naphtha captively consumed for producing electricity which in turn was used in the manufacture of the final products was disallowed as also the use thereof for flushing. Therefore, the Orders-in-Appeal Nos. 6/98, 7/98 and 8/98 deal with the quantified duty demands following out of the earlier Order-in-Appeal No. 47/95 and the demand for duty of Rs. 2.70,13,294/- stood confirmed.

4. Vide Stay Order No. 280/97 dated 9.6.97, the Tribunal had ordered pre-deposit of a sum of Rs. 23,50,000/- which had been complied on 25.7.97 by the appellants.

5. Thereafter, vide this Tribunal Miscellaneous Order No. 610/99 and Stay Order No. 1026-1029/99 dated 5.7.99, the Tribunal had noted that as per the directions given by the Committee of Secretaries in the Cabinet Secretariat, the appellants had deposited Rs. 1,35,06,647/-. Therefore, the appellants have pre-deposited the two amounts as per the two stay orders noted above, the rest having been waived and stayed by the said interim orders of the Tribunal.

6. In these appeals before us, in view of the narration of events recorded above, only two issues for determination before us are as follows :-

(i) Whether exemption from Central Excise duty would be available on naphtha captively consumed for generation of electricity etc. which is in turn used in the manufacture of final products falling under Chapter 27 of the Central Excise Tariff in terms of the Notifications mentioned above? and

(ii) Whether Naphtha captively consumed for flushing of pipelines would be eligible for similar exemptions? The period in question is from 01.03.94 to December, 1996.

7. Heard Sri Habibullah Badsha, learned Sr. advocate for the appellants assisted by Sri C. Manishankar, learned advocate and Sri. S. Kannan, learned D.R.

8. The learned advocate submits that the Orders-in-Appeal impugned have erroneously denied the exemption claimed on naphtha under the said Notifications. With respect to the clearances of naphtha for captive consumption for use in generation of electricity which in turn is used in the manufacture of petroleum products under Chapter 27 ibid, his submissions are as follows :-

(a) A plain reading of the Notification No. 217/86, as amended shows that the Government has consciously exempted such products as are listed in column 2 of the table annexed thereto, when the