2019 (6) TMI 561 - AT - Central Excise

Withdrawal of the Warehousing provisions - benefit of N/N. 6/2002-CE dated 01.03.2002 (Sl. No. 22) - HELD THAT - The conditions specified in the Sl. No. 22 of the Notification No. 6/2002-CE are meant to ensure that Naphtha cleared from Refinery and received in the other factory is used in the manufacture of fertilizers. Towards this purpose various conditions as prescribed in the Rules for required to be satisfied. Though the lower authorities, in the initial period have held that the conditions as per Rules have not been satisfied, there is no dispute to the fact that Naphtha received by OCFL have been utilised for the manufacture of fertilizers. The receipt of Naphtha from NRL through the depots of BPCL is evidenced by the Registers maintained at the end of OCFL. The use of naphtha received in the manufacture of fertilizers is evidenced from such registers. This also stands certified by the Jurisdictional Superintendent after verification of such records. The correlation of the supplies made by the NRL, which was accompanied by invoices of BPCL, also stands established on the basis of stock statement prepared by BPCL. Since the receipt of Naphtha in OCFL and use thereof for manufacture of fertilizer are established, we are of the view that the benefit of Notification No. 6/2002-CE dated 01.03.2002 (Sl. No. 22) cannot be denied to NRL. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Interpretation of Notification No. 6/2002-CE dated 01.03.2002 regarding the clearance of Naphtha for use in the manufacture of ammonia and fertilizer.
- Rejection of refund claim by the original authority and Commissioner (Appeals) for duty paid during a specific period.
- Dispute over the denial of refund by the Departmental Authorities for a subsequent period.
- Verification of compliance with the conditions specified in the Central Excise Rules for concessional rate of duty on Naphtha.

Analysis:
1. The case involved the interpretation of Notification No. 6/2002-CE dated 01.03.2002 regarding the clearance of Naphtha for use in the manufacture of ammonia and fertilizer. The notification provided a 'nil' rate of duty for Naphtha under specific conditions.

2. The dispute arose from the rejection of a refund claim by the original authority and Commissioner (Appeals) for duty paid during a particular period. The appellant had cleared Naphtha on payment of duty after the withdrawal of Warehousing provisions, leading to the refund claim.

3. Another issue was the denial of the refund by the Departmental Authorities for a subsequent period, challenging the grant of refund by the Commissioner (Appeals) based on verification by jurisdictional authorities.

4. The central point of contention was the verification of compliance with the conditions specified in the Central Excise Rules for the concessional rate of duty on Naphtha. The appellant argued that despite the initial denial of the refund, the Naphtha had been used for the manufacture of fertilizers, supported by documentation and verification.

5. After a detailed hearing and examination of the records, the Tribunal found that the conditions of the Notification had been satisfied, as evidenced by the utilization of Naphtha in the manufacture of fertilizers. The Tribunal set aside the Order-in-Appeal that denied the refund and allowed the appeal filed by the appellant.

6. Consequently, the Tribunal upheld the order dated 25.01.2011, rejecting the appeal filed by the Revenue for the subsequent period. The decision was based on the established compliance with the conditions for the concessional rate of duty on Naphtha, leading to the rejection of the Revenue's appeal.

7. The judgment emphasized the importance of verifying compliance with legal provisions and ensuring that the benefits under notifications are granted based on substantiated evidence. The decision provided clarity on the interpretation of the Notification and the application of Central Excise Rules in similar cases.