2020 (12) TMI 845 - AT - Central Excise

Area Based Exemption - N/N. 33/99-CE dated 08.07.1999 - exemption on LPG and Solvex-GL - Whether the Commissioner(Appeals) is right in holding that Review Commissioner s view that Solvex-GL, being gas is excluded from sub-serial No.13(i) of the schedule to the Notification No.33/99 CE dated 08.07.1999 as amended, is eccentric, irrational and egregious? - HELD THAT - Notification No.33/99 provides for exemption to goods specified in the schedule appended to the Notification and cleared from a unit located in the state of Assam or Tripura or Meghalaya or Mizoram or Nagaland or Arunachal Pradesh as the case may be, from so much of the duty of excise, leviable thereon, under any of the said acts as is equivalent to the amount of duty paid by the manufacturer of goods from the account current maintained under Rule9 read with Rule 173 G of the Central Excise Rules, 1944. On perusal of Schedule to the Notification at Sl.No.13, it is apparent that the exemption is available to the gas based intermediate products. Sub-Sl. No. 13(i) of the schedule relates to gas exploration and production. Whereas Sl.No.13 mentions about gas based inter-mediate products. Sub-Sl. No.(i) refers to gas exploration and production. It is evident that the schedule not only refers to certain products but also to certain processes. The only inference one can get is that the products generated in the processes mentioned are covered by the entry and are eligible for exemption. Going by the manufacturing process given by the respondents and not disputed by the Revenue, we find that Solvex GL is manufactured during the process of production of LPG gas which is subsequently bottled and sold. The exemption cannot be restricted to products which are formed in the gaseous stage alone for the reason that the exemption refers to gas based intermediate products and gas exploration and production. The correct interpretation of gas based products would go to include all the products which are produced in the processes of production of gas/LPG. The argument taken by the appellants appears to be farfetched for the reason that even LPG for which the exemption was extended by the department is also in the bottle and sold in the liquefied form. The Notification does not give any such interpretation. It is clear that the entry 13 of the schedule refers to certain products which are not gaseous in nature. The main heading gas based intermediate products has to include all the products intermediate or finally produced or occurring or manufactured in the process of exploration and production of gas. The distinction that the department is trying to bring in between liquids and gases is not acceptable. The Notification squarely covers the impugned product and the benefit of the same is available to the respondents - Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Correctness of the Commissioner(Appeals) Order-in-Appeal dated 30.08.2011 in rejecting the Deputy Commissioner's order and upholding the refund order.
2. Legality of the Commissioner(Appeals) holding Solvex-GL as not covered under the exemption Notification.

Analysis:
Issue 1: The appellant Revenue argued that Solvex-GL is a liquid, not gas, hence not covered under the exemption Notification. They emphasized that the Notification refers to gases only, excluding liquids, and Solvex-GL is classified as a liquid under CETA, 1985. The Authorized Representative asserted that Solvex-GL does not meet the criteria under the Notification and is ineligible for exemption.

Issue 2: The respondents claimed exemption for LPG and Solvex-GL under the Notification. They contended that Solvex-GL is a gas-based intermediate product arising from natural gas, used in various industries. The Assistant Commissioner granted a refund for Solvex-GL under the Notification, emphasizing its eligibility as a gas-based intermediate product. The respondents argued that Solvex-GL falls under Serial No.13, entry (i) of the Notification, qualifying for exemption.

The Tribunal analyzed the manufacturing process, noting that both LPG and Solvex-GL are gaseous products stored as liquids, derived from natural gas. They observed that Solvex-GL is produced during LPG production and is used in industries. The Tribunal interpreted the Notification, stating that it covers products generated during gas exploration and production processes, including both gaseous and liquid intermediates. They rejected the department's argument of restricting exemption to gaseous products, asserting that the Notification encompasses all products from gas production processes.

In conclusion, the Tribunal held that Solvex-GL qualifies for exemption under the Notification as a gas-based intermediate product. They emphasized that the Notification's wording supports the inclusion of all products from gas production processes, regardless of their physical state. The Tribunal rejected the department's appeal, affirming the eligibility of Solvex-GL for exemption under the Notification.

This detailed analysis of the issues involved in the legal judgment highlights the arguments presented by both parties and the Tribunal's interpretation of the law to determine the eligibility of Solvex-GL for exemption under the Notification.