2005 (6) TMI 378 - AT - Central Excise

Summary

Issues:
Eligibility for exemption on Hexane under Chapter X

Analysis:
The judgment revolves around the eligibility for exemption on Hexane obtained under Chapter X by the appellants. The issue at hand is whether the appellants are entitled to exemption under Sr. 8 of the Table to Notification 75/84. The notification specifies that special boiling point spirits intended for use in the manufacture of solvent-extracted fixed vegetable oil are eligible for a nil rate of duty. The department alleged that the Hexane was used partly for the manufacture of solvent-extracted VNE and partly for further processing in the refinery or purification of oils into the Miscella Refinery Plant. The department contended that the exemption should not apply to the refining process as it is not part of the solvent extraction process. However, the condition under Sr. 8 does not explicitly restrict the use of Hexane only up to the solvent extraction process, as argued by the department.

The tribunal observed that the words "intended for use in the manufacture of solvent extracted and fixed vegetable oil" in the notification could encompass operations incidental and ancillary to make the extracted oil marketable. The tribunal referred to a previous decision and noted that the use of Hexane in refining operations within the same premises could be eligible for the exemption. However, it was pointed out that the process on record did not exclusively use in-house solvent-extracted oil in the Miscella Refinery, indicating that the use of Hexane in refining oils not originating on the premises was not contemplated by the notification. Therefore, the tribunal directed the appeal to be remanded back to the original authority for verification and quantification of the benefit to Hexane used in the process of Miscella Refining of in-house solvent-extracted oils.

Another issue raised was whether any demand in this case should be on the manufacturer of Hexane or the consumer of Hexane. This issue was left open for redetermination in the remand proceeding. Ultimately, the appeal was allowed on the terms of remand for a fresh adjudication by the original authority. The judgment highlights the importance of interpreting the conditions of exemptions accurately and ensuring that the use of substances aligns with the intended purposes specified in the notifications to claim benefits effectively.