Ruma Pal, J. - (1.) The petitioner is a Government of India Undertaking. According to the petitioner it has a factory at Dhaligaon in which there are several units namely, a Refinery Unit, a Xylene Unit and a Polyester Staple Fibre Unit. It is not disputed that these units are situated in an area measuring 3.926 sq. km. and is encircled by a single boundary wall. All these units are under the management and control of the petitioner. The said three units have been considered as one factory under the provisions of the Factories Act, 1949 and a licence was granted accordingly. The Refinery Unit refines/ processes crude petroleum. Various products are obtained from such refining/processing including Low Sulphur Heavy Stock (hereinafter referred to as LSHS). The LSHS is used as fuel in the Xylene and Polyester Staple Fibre Units. There is no dispute that LSHS is classifiable under Chapter 27, Heading 2713.30 of the Central Excise Tariff Act, 1985 (hereinafter referred to as the said Act).
(2.) On 1st March, 1989 a Notification No. 28/89-C.E. was issued (hereinafter referred to the said Notification). The said notification provides as under : "Exemption to goods other than blended or compounded lubricating oils and greases. In exercise of the powers conferred by Sub-section (1) of Section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods (other than blended or compounded lubricating oils and greases) falling under Chapter 27 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) produced in a factory and - (a) utilised in the factory in which the said excisable goods are produced, for the manufacture of any goods falling under the said Schedule or as fuel for such manufacture (excluding fuel used for any internal combustion engine) or both; (b) allowed to escape in the atmosphere by flare system or otherwise; from the whole of the duty of excise leviable thereon which is specified in the said Schedule".
(3.) On the basis of the said Notification the petitioner filed a Classification List on 20-4-1989 claiming exemption of LSHS used for fuel in the manufacture of Xylene and Polyester Staple fibre in the petitioner's factory. The classification list was approved and the petitioner availed of the exemption granted by the said Notification.;