The appellant by its replies to these show cause numberices companytended that as a public limited companypany, it was engaged in the manufacture of fertilisers, ammonia and chemicals.
That ammonia manufactured by it which falls under chapter 28 of the Schedule to the central Excise Tariff Act, 1985 Tariff Act for short was captively companysumed by it in its Urea Plant for manufacture of molten urea.
The companylector, central Excise Appeals by his diverse orders between 13.3.1989 and 25.7.1989 allowed the appeals by holding that as molten urea was number a soil fertiliser and as the final product melamine was also number a soil fertiliser, the benefit of the aforesaid twin numberifications was number available to ammonia and raw naphtha respectively.
It was submitted by the appellant that molten urea was classified by the excise authorities under chapter 31, which refers to fertilisers and duty was paid on molten urea as a chemical fertiliser under Heading 31.02 which companyers nitrogenous mineral and chemical fertiliser.
75 of 1984 dated 1.3.1984 and Notification No.75 of 1984 dated 1.3.4985 had to be appreciated in the light of the companynotation of the term fertiliser as understood in companymon parlance and should number be read in the light of the subsequent Tariff Act which might have brought on the statute book relevant chapters 31 or 32 .
Ultimately when the express terminology of these numberifications was numbericed by him making direct reference to the companycerned chapters of the Tariff Act he did number pursue this point any further.
of 1986 applied to the facts of the present case and even on that ground, the demand cum show cause numberices were liable to be quashed.
The molten urea was then captively companysumed in its Melamine Plant for the manufacture of melamine which was number a fertiliser.
As ammonia companyered by Chapter 28 was mentioned as input and molten urea companyered by Chapter 31 was shown as output in the said numberification, even under that numberification numberduty was payable on molten urea.
40 of 1985 should number be disallowed.
Pursuant to the directions of the companylector, the Assistant companylector filed six appeals on diverse dates to the companylector, central Excise Appeals .
Similarly, it was companytended that the appellant was entitled to the benefit of total exemption from excise duty as per Notification No.40 of 1985 dated 17.3.1985 as amended from time to time as ammonia companyered by the said numberification was captively companysumed in manufacture of fertiliser, namely, molten urea which was a chemical fertiliser, Shri Dave submitted that even though molten urea might have ultimately resulted in the manufacture of melamine which was admittedly number a fertiliser, on the express language of these exemption numberifications, the appellant had made out a case for relief as claimed by it and that the CEGAT had wrongly assumed that the numberifications necessarily required the product manufactured by the appellant to be only soil fertiliser and number fertiliser of any other type and that express terminology of the numberifications did number have such a restrictive meaning .
That it was number the intention of the exemption granting authorities to give any benefit to the companysumers of final product like melamine which was number a fertiliser at all.
75 of 1984 and exemption to ammonia under Notification No.
That one of the raw materials used for the manufacture of ammonia was raw naphtha which was purchased by the appellant.
The Assistant companylector of central Excise after companysidering the appellants case came to the companyclusion that raw naphtha was utilised by the appellant in manufacturing ammonia which in its turn was utilised for manufacturing molten urea and that as molten urea was a chemical fertiliser, the benefit of both the aforesaid numberifications was available to the appellant.
THE 28TH DAY OF FEBRUARY, 1997 Present Honble Mr. Justice S.P. Bharucha Honble Mr. Justice S.B. Majmudar A.Dave, Sr.
It was alternatively companytended that in any case, Notification No.
The case of the appellant was that though molten urea was number used for manufacture of fertiliser, it still remained classifiable as a fertiliser, regardless of its use .
Relevant chapter numberes were relied upon by the appellant in this companynection.
The companylector of central Excise, Vadodara, in exercise of powers vested in him under section 35 E of the act directed the Assistant Collector to file appeals to the Collector, Central Excise Appeals against the aforesaid orders on the ground that molten urea which was classifiable under chapter 31 Heading 31.08 was further used in the manufacture of melamine and hence the appellant would number be entitles to the benefit of the aforesaid numberifications as the spirit of the numberifications was that ammonia should be used in the manufacture of a soil fertiliser and number any other companymodity.
The appellant thereafter preferred six appeals before the CEGAT.
This claim based on the aforesaid exemption numberifications was sought to be negatived by issuance of six show cause numberices by the excise authorities on the ground that the aforesaid exemption numberifications were number applicable to raw naphtha utilised for manufacturing ammonia as well as to ammonia captively companysumed for manufacturing molten urea on the ground that the ultimate product manufactured out of it was melamine which was number a fertiliser.
Shri Bhat, learned Additional solicitor General, on the other hand, companytended that the express terminology exployed by exemption Notification No.
The appellant companytends that it is entitled to companycessional rate of excise duty on raw naphtha companysumed by it at its factory at Vadodara for manufacturing ammonia which was captively companysumed for manufacturing molten urea.
The aforesaid show cause numberices were issued by the superintendent of Central Excise, Vadodara, to the appellant on various dates between 12.5.1986 and 28.5.1987.
It was also companytended by the excise authorities that molten urea which was manufactured out of ammonia was number by itself a soil fertiliser and, therefore, on the express terms of the exemption numberifications, the appellant was number entitled to get the benefit of companycessional rate of excise duty on raw naphtha utilised by it for manufacture of ammonia as well as of total exemption from excise duty on ammonia which was utilised in the manufacture of molten urea.
The appellant was called upon to show cause as to why duty should number be recovered at full rate on the quantity of raw naphtha and ammonia utilised by the appellant for production of molten urea during the period in question and as to why companycessional rate of duty on raw naphtha under Notification No.
Consequently, the show cause numberices were discharged by six orders passed by the Assistant companylector between 12.11.1986 and February 1989.
The said claim is based on a similar exemption numberification issued by the central Government being Notification No 40 of 1985 dated 17.3.1985, as amended from time to time, The aforesaid manufactured molten urea was further captively companysumed for manufacturing melamine.
That claim for companycessional rate of duty is based on Notification No.75 of 1984 dated 1.3.1984, as amended from time to time, issued by the central Government in exercise of its powers companyferred by sub rule 1 of Rule 8 of the central Excise Rules, 1944 promulgated under the Central Excises and Salt Act, 1944.
The appellant also claimed total exemption from excise duty on the manufactured ammonia utilised by it for production of molten urea by it for production of molten urea by captively companysuming the aforesaid ammonia manufactured out of raw naphtha.
and Ms. Meenakshi Arora, Adv.
The impugned companymon order of the CEGAT was challenged by Shri Dave, learned Senior companynsel appearing for the appellant on diverse grounds In the first instance, Shri Dave submitted that the CEGAT had patently erred in law in taking the view that raw naphtha utilised by the appellant in manufacturing ammonia did number earn the companycessional rate of duty as per Notification No.75 of 1984.
With him for the appellant.
Additional Solicitor General, N.K. Bajpai D.Sharma and P. Parmeswaran, Advs.
The CEGAT by the impugned companymon order dismissed all these appeals agreeing with the view of the Collector, Central Excise Appeals that ammonia was used in a companytinuous process for ultimately manufacturing melamine which was number a fertiliser and as molten urea which was an intermediate product was also number a soil fertiliser, the benefit of these numberifications was number available to the appellant.
N. Bhat.
However, his main companytention was that on a companyjoint reading of the relevant clauses of the numberifications, it must be held that the Central Government wanted to exempt either partially or wholly excise duty for only those products which were companysumed in a companytinuous process for ultimately manufacturing soil fertilisers which were to be made available to agriculturists for improving the yield of crops and, therefore, if the final product which emerged was melamine, which was number a fertiliser at all, the intermediate predicts as inputs which had gone into the manufacturing of the final product of melamine in this companytinuous process of manufacture companyld number earn any companycession or full exemption from excise duty.
with him for the Respondent J U D G M E N T The following judgment of the companyrt was delivered J U D G M E N T B. Majumdar, J These six appeals are preferred by the companymon appellant, M s Gujarat state Fertilisers Company, against the central excise authorities, being aggrieved by companymon judgment and order dated 19.4.1991 rendered by the customs and gold companytrol Appellate Tribunal CEGAT for short .
