1978 (11) TMI 80 - CGOVT - Central Excise

Summary

Issues:
Whether Ethylene Gas used in the manufacture of chemicals qualifies for exemption under Notification No. 276/67-C.E., dated 21-12-1967.

Analysis:
The case revolves around the eligibility of Ethylene Gas for exemption under a specific notification. The petitioners, a chemical company, sought to bring non-duty paid Ethylene Gas for use in the manufacture of chemicals. The Assistant Collector initially rejected their request, stating that since the gas was used only for refrigeration purposes and did not undergo any substantial change, it did not qualify for the exemption.

In their appeal, the petitioners argued that Ethylene Gas was essential for the manufacturing process as it facilitated the separation of hydrogen chloride, a crucial step in producing chemicals. They contended that the term "used in manufacture" should be interpreted broadly, not requiring the gas to undergo a chemical change itself. However, the Appellate Collector upheld the initial decision, emphasizing that the gas was used solely as a refrigerant and not directly in the manufacturing process.

The petitioners then submitted a Revision Application to the Government of India, asserting that the manner of use should not be a determining factor for exemption eligibility. They highlighted the necessity of Ethylene Gas for obtaining low temperatures critical in the manufacturing process. The government considered the arguments and examined the records, focusing on the language and scope of the relevant notification.

Upon interpretation, the government found that the exemption was not limited to materials directly absorbed in the manufacturing process. They cited a specific exclusion in the notification related to fuel use, indicating a broader applicability of the exemption. Additionally, they referenced a Supreme Court case emphasizing adherence to the plain terms of exemptions without inferring intentions beyond the notification's language.

Based on this analysis, the Government of India concluded that Ethylene Gas, even if not wholly absorbed in the chemicals manufactured, was eligible for the exemption under the notification. They granted the Revision Application, allowing the petitioners to avail of the duty exemption for the gas used in the manufacturing process.