- (1.) The present appeal has been filed by the Revenue against the judgment dated 5th September, 2000, passed by the Customs Excise & Gold (Control) Appellate Tribunal (in short "Tribunal"), West Regional Bench at Mumbai in Appeal No. 4081/98. The issue involved in the present case is as to whether the Respondent-Assessee is entitled to modvat credit on low Sulphur heavy stock (in short "LSHS") used in the manufacture of steam which in turn was used for the manufacture of the final product, namely, fertilizer which was fully exempt from payment of excise duty.
(2.) The Respondent was receiving duty paid LSHS and was availing of modvat credit thereon under the provisions of Rule 57 (B) of the Central Excise Rules 1944 (in short "The Rules"). The LSHS so procured was used in the generation of steam which in turn was exclusively used in the manufacture of fertilizers exempted from payment of excise duty under the Tariff itself.
(3.) The Revenue issued a show cause notice being F. No. V28(4)324/98/MP dated 18th March, 1998 to the Respondent to show cause as to why the modvat credit availed of by the Respondent in respect of the duty paid on LSHS which is used for generation of steam which in turn is used as fuel in the manufacture of fertilizers which were cleared at nil rate of duty if sold for agricultural purpose should not be disallowed and the duty be not recovered from the Respondent. The Respondent was further required to show cause as to why penalty should not be imposed under the provisions of Rule 173Q(1)(bb) of the Rules.;