Aggrieved by the impugned order rendered by the Tribunal, the Revenue is in appeal before this Court.
Following five show cause numberices were issued to the respondent.
In the circumstances, five show cause numberices were issued to the respondent assessee demanding central excise duty for the inputs ethylene and propylene used in the manufacture of finished products falling under chapter 27.
It is as a result of this cracking that ethylene, propylene along with ethane, methane and other substances emerge.
Penalty was also proposed.
After the process of cracking, Ethylene and Propylene gases are produced in the factory.
The manufacture of the products falling under chapter 27 has never been informed to the authorities through the classification list filed by the assessee.
The captively companysumed ethylene and propylene are further used in refrigeration to manufacture products falling under chapters 27 and 29.
The remaining quantity of ethylene and propylene is sold as the final product.
Hence, as per the numberification the ethylene and propylene inputs used for the manufacture of goods falling under chapter 27 are number entitled to get exemption from duty as per the numberification.
The respondent has submitted a chart indicating the process of manufacturing of ethylene and propylene.
The extended period of limitation was also invoked.
The emergence of ethane and methane is inevitable.
CII/1570/WZB/2002 in Appeal No.
It was companytended by the respondent that ethylene and propylene were used as refrigerant to companyl hydrocarbon gases, which result from the cracking of naphtha.
Ethylene and propylene fall under chapter 29 of the Central Excise Tariff Act, 1985 hereinafter referred to as the Tariff Act .
Raw Naptha is cracked in cracker companytaining number of burners and heated upto 800 degree centigrade.
Methane and the ethane fall under chapter 27 of the Tariff Act.
The case of the appellant as set out in appeal is as follows The respondent assessee holds Central Excise Registration for manufacture of excisable goods falling under chapter Nos.
The respondent further submitted that part of ethylene and propylene manufactured by it is captively companysumed or used in or in relation to the manufacture of the same goods.
The respondent assessee submitted that there was numberway by which the respondent companyld have manufactured ethylene and propylene without producing ethane and methane.
Chapter heading 27 is number available in companyumn 3 of the Table.
In other words, excise duty will have to be paid by the respondent assessee for such of the quantity of ethylene and propylene inputs captively companysumed and used in the manufacture of products falling under chapter 27 namely methane and ethane.
The respondent manufactures petro chemicals falling under chapters 27 and 29 from raw naptha.
27, 28, 29, 32, 38, 39 and 40 of the Schedule to the Tariff Act.
It is number as if by using a smaller quantity of raw material or other goods involved in the process, the respondent companyld have averted the emergence of ethane and methane.
In other words, in the technology utilized for the manufacture of ethylene and propylene, the emergence of ethane and methane was inevitable.
During the process of cracking raw naphtha, gases such as methane and ethane automatically emerge as by products and is an inevitable companysequence of cracking of raw naphtha.
It is the companymon case of the parties that a part of the ethylene and propylene manufactured by the aforesaid process is captively companysumed by using the same as a refrigerant in the process of separation and to provide external treatment to keep some of the products at low temperature to prevent their polymerization.
The emergence of ethane and methane, therefore, by itself is number a ground for denying the exemption companytained in the numberification.
These gases are also captively companysumed as a refrigerant for companyling since they have the property of reducing temperatures upto 100 degree c. and 30 degree c. respectively.
It is the further case of the appellant that as per Exemption Notification No.217/86 CE dated 2.4.1986, the inputs ethylene and propylene falling under chapter 29 captively companysumed in the manufacture of finished goods falling under chapter 29 are exempted from excise duty.
The chart also reveals how ethane and methane emerge as by products.
In the order in original there is specific finding that ethylene and propylene are used in the manufacture of goods falling under chapter 27.
The chart is reproduced as under The process of manufacture indicated in the chart indicates that some gases automatically emerge in the process of cracking of naphtha, including ethane and methane.
The appeal filed by the assessee before the Tribunal was allowed by setting aside the order of the Commissioner through the impugned order dated 20.5.2002.
As per the said numberification such exemption will number be available to ethylene and propylene used in the manufacture of goods falling under chapter 27, namely methane and ethane.
The respondent assessee M s National Organic Chemical Industries Limited manufactured ethylene and propylene by cracking raw naphtha in a naphtha cracker.
The methane and ethane, the finished products manufactured by using ethylene and propylene as refrigerant fall under chapter 27.
The methane and ethane manufactured in this process fall under chapter 27.
E 2354/96 Bombay.
Date Period 1 03.02.1993 July 1992 to December, 1992 2 04.06.1993 May 1988 to June 1992 3 02.08.1993 January 1993 to May 1993 4 28.12.1993 June 1993 to November 1993 5 29.06.1994 December 1993 to February 1994 By order in original dated 12.7.1996, the Commissioner Central Excise, Mumbai III companyfirmed the duty demands, imposed penalty and ordered interest for delayed payment of duty but did number order companyfiscation of land, building, plant, machinery, etc.
of the assessee.
According to the appellant, the assessee is number entitled to get the benefit of the exemption numberification if the inputs manufactured in the factory are captively used for the manufacture of final products number specified in companyumn 3 of the Table annexed to the numberification.
Dalveer Bhandari, J. This appeal is directed against the judgment and order dated 20th May, 2002 passed by the Customs Excise Gold Control Appellate Tribunal, West Zonal Bench at Mumbai vide Order No.
Ethylene and propylene fall under chapter 29.
