Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Fertilizer Corporation Of India ... on 30 October, 1987
Equivalent citations: 1988(33)ELT457(TRI-DEL)
ORDER V.P. Gulati, Member (T)
1. This is an appeal filed by the Collector of Central Excise, Patna against the order of the Collector of Central Excise (Appeals), Calcutta.
2. Brief facts of the case are that the respondents obtained LSHS at concessional assessment under Notification No. 147/74, dated 30-10-1974 for the purpose of use of the same as feedstock in the manufacture of fertilizer. The respondents manufactured ammonia utilising the feedstock and transferred this ammonia to another factory where, it is stated, ammonia was utilised for the manufacture of fertilizer. The movement of the LSHS to the respondents' factory was under Chapter X Procedure. The Collector (Appeals) held that inasmuch as the ammonia had been utilised for the manufacture of fertilizer, the requirement of Notification No. 147/74 can be taken to have been fulfilled and set aside the demand raised against the respondents by the lower authority for the reason that the respondents had not manufactured fertilizer in their factory out of LSHS and that they had only manufactured ammonia therefrom. For the proper appreciation of the facts and for convenience of reference Notification No. 147/74 is reproduced below :
"In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, read with Sub-section (3) of Section 3 of the Mineral Products (Additional Duties of Excise & Customs), Act 1958 (27 of 1958), the Central Government hereby exempts furnace oil and heavy petroleum stock, falling respectively under Item Nos. 10 and 11A of the First. Schedule to the Central Excises and Salt Act, 1944, (1 of 1944) and intended for use as feedstock in the manufacture of fertilizers, from -
(a) the whole of the duty of excise leviable thereon; and
(b) the whole of the additional duty of excise leviable thereon under the Mineral Products (Additional Duties of Excise and Customs) Act, 1958;
Provided that -
(i) it is proved to the satisfaction of the Assistant Collector of Central Excise that such furnace oil or heavy petroleum stock is so used, and
(ii) the procedure set out in Chapter X of the Central Excise Rules, 1944, is followed."
3. The learned JDR for the Department, Smt. J.K. Chander, pleaded that in terms of the notification, the L.S.H.S. obtained by the respondents was required to be used for the manufacture of fertilizers and. since the respondents produced only ammonia out of it, they were debarred from the benefit of the notification. She pleaded that it is nobody's case that ammonia itself is a fertilizer and known so in the market. She, however, conceded that the ammonia produced was removed under Chapter X Procedure to another unit where fertilizer was manufactured. She pleaded that even if said ammonia produced out of LSHS obtained at concessional rate of duty was utilised for the manufacture of fertilizer, the necessary verification in this regard was required to be done before the concession could be extended in respect of LSHS even if it was held that the same when utilised for the manufacture of ammonia ultimately consumed in the manufacture of fertilizer, was eligible for the benefit of Notification No. 147/74. She pleaded that inasmuch as the Collector (Appeals) had allowed concessional benefit without necessary verification, his order was defective.
4. The learned Manager of the Respondent Company, Shri J.N. Biswas, pleaded that movement of LSHS for utilisation in the manufacture of ammonia as also transfer of ammonia for the manufacture of fertilizer to other units was done under provisions of Chapter X. He, however, conceded that Collector (Appeals) did not get any verification done in regard to actual utilisation of ammonia for the manufacture of fertilizer.
5. We observe that so far as Notification No. 147/74 is concerned, the benefit of concession is available if it is proved to the satisfaction of the Assistant Collector, Central Excise, that such furnace oil or heavy petroleum stock had been used in the manufacture of fertilizer and that Chapter X Procedure is followed. We find that the wordings of the notify cation do not envisage that the LSHS obtained by the respondents should be utilised in the factory of the respondents alone for the manufacture of fertilizers. All that the notification requires is that the LSHS exempted under the notification should be firstly intended for use as feedstock in the manufacture of fertilizer and should be so utilised. The manufacture of fertilizer involves various steps, one such step is the generation of ammonia out of the inputs and this ultimately is converted into fertilizer. In the instant case, what has happened is that the ammonia has been produced in one unit out of LSHS obtained at the concessional rate and is stated to have been utilised in the manufacture of fertilizers in the other unit. In the absence of any restriction in the notification that LSHS obtained should be utilised in the same unit for the manufacture of fertilizer, the benefit of concessional assessment has to be allowed so long as it can be shown that the same has been utilised for the manufacture of fertilizer subject to the other provisions of the notification after observing the Procedure prescribed in this regard under the Notification. It is not disputed that Chapter X Procedure had been followed in respect of the movement of LSHS as also of ammonia. However, it has not been shown and proved to the Assistant Collector that the said ammonia ultimately was utilised for the manufacture of fertilizer. The Collector (Appeals) was wrong in extending benefit of the concessional assessment without getting the necessary verification done in this regard as the notification clearly stipulates that it has to be proved that said LSHS has been utilised for the manufacture of fertilizers. In view of the above, we find it a fit case for remand and remand the case to the 3urisdictional Assistant Collector for verification of the use of the LSHS in the manufacture of ammonia and of the ammonia generated therefrom for the manufacture of fertilizers. On the satisfaction of the Assistant Collector in regard to proviso (1) of the Notification 147/74, the said condition in regard to the utilisation of LSHS as proved to have been utilised in the manufacture of fertilizer will be treated to be fulfilled. The appeal is, thus allowed by remand in the above terms.