2015 (4) TMI 456 - SC - Central Excise

Excisability of lean gas - Natural gas or not - Held that - Following decision of OIL INDIA LTD. Versus COMMISSIONER OF CENTRAL EXCISE, SHILLONG 2002 (6) TMI 402 - CEGAT, NEW DELHI appellant is right in contending that Lean Gas is in fact natural gas and therefore would attract nil duty. - Decided against Revenue.

Summary

Issues:
1. Interpretation of excise duty on Lean Gas.
2. Applicability of earlier judgments on similar issues.
3. Dismissal of appeals by the Supreme Court.

Issue 1: Interpretation of excise duty on Lean Gas
In the case of C.A.No. 3315/2008, the appellant, ONGC, challenged the dismissal of its appeal by the CESTAT regarding the excisability of Lean Gas. The Tribunal did not agree with the appellant's argument that Lean Gas, being natural gas, should attract nil duty. The Tribunal's decision was based on the classification of Lean Gas under a different sub-heading for excise duty. However, referring to an earlier case involving Oil India Ltd., where a similar issue was raised and decided in favor of the assessee, it was established that Lean Gas is indeed classified as natural gas. The Supreme Court upheld the appellant's contention, recognizing Lean Gas as natural gas and thus not subject to excise duty.

Issue 2: Applicability of earlier judgments on similar issues
The Supreme Court highlighted the relevance of previous judgments, particularly the case of Oil India Ltd., which addressed the classification of Lean Gas as natural gas for excise duty purposes. The Court noted that the issue had already been settled in the earlier case, where it was established that Lean Gas falls under the category of natural gas and is, therefore, exempt from excise duty. By referencing the previous decision and the reasoning behind it, the Court supported the appellant's argument and allowed the appeal by overturning the Tribunal's decision.

Issue 3: Dismissal of appeals by the Supreme Court
In the judgment, the Supreme Court dismissed the appeals in C.A.Nos. 4306-4307/2004 and 941/2005 after considering the arguments presented by both sides. The Court affirmed the Tribunal's decision, which was based on a previous judgment related to Oil India Ltd., where the issue at hand had already been addressed and settled. The Court stated that the Tribunal's conclusion aligned with the precedent set by the earlier case, leading to the dismissal of the appeals. Similarly, in C.A.No. 3315/2008, the Court allowed the appeal filed by ONGC against the CESTAT's order, emphasizing the classification of Lean Gas as natural gas and exempt from excise duty based on the principles established in the previous judgment.

By analyzing the issues related to the interpretation of excise duty on Lean Gas, the applicability of earlier judgments, and the dismissal of appeals by the Supreme Court, the judgment provided clarity on the classification of Lean Gas and its exemption from excise duty as natural gas.