1999 (1) TMI 45 - HC - Central Excise

Issues Involved:
1. Whether L.S.H.S. and F.O. used in the petitioner's fertilizer plant qualify for total exemption from excise duty as 'Feed stock' under exemption notification No. 147 of 1974.
2. Whether the Tribunal had jurisdiction to entertain appeals under Section 36(2) of the Central Excises and Salt Act, 1944, after the amendment by Finance (No. 2) Act, 1980.

Summary:

Issue 1: Exemption of L.S.H.S. and F.O. as 'Feed stock'
The primary controversy in this batch of writ petitions revolves around whether Low Sulphur Heavy Stock (L.S.H.S.) and Furnace Oil (F.O.) used in the petitioner's fertilizer plant qualify for total exemption from excise duty as 'Feed stock' under exemption notification No. 147 of 1974. The petitioner argued that L.S.H.S. and F.O. are essential for the partial oxidation process used in the manufacture of fertilizer, and therefore should be exempt from duty. The respondents contended that since L.S.H.S./F.O. is used only for steam generation and does not form a component of the end-product (Urea), it does not qualify as 'feed stock'.

The court examined the definition of 'feed stock' and relevant Supreme Court decisions, concluding that it is not necessary for an input to be a component of the end-product to qualify as 'feed stock'. The process of generating steam, which is essential for manufacturing fertilizer, qualifies L.S.H.S./F.O. for exemption under the notification.

Issue 2: Jurisdiction of the Tribunal u/s 36(2)
In CWJC Nos. 4888 and 4901 of 1987, it was contended that the Tribunal lacked jurisdiction to entertain appeals under Section 36(2) of the Central Excises and Salt Act, 1944, as the provision was repealed by the Finance (No. 2) Act, 1980. The court did not find it necessary to address this issue in detail, as the orders of the Tribunal were set aside on other grounds.

Detailed Judgment:
1. CWJC No. 4888 of 1987: The court quashed the Tribunal's order dated 17-12-1986 and restored the Board's order dated 22-2-1982, which upheld the petitioner's contention that L.S.H.S./F.O. used for steam generation qualifies for exemption under the notification.

2. CWJC No. 4900 of 1987: The court quashed the Tribunal's order dated 6-3-1987 and passed an order in the same terms as in CWJC No. 4888 of 1987.

3. CWJC No. 4901 of 1987: The court quashed the Tribunal's order dated 17-12-1986 and restored the Board's order dated 5-6-1982, which upheld the petitioner's contention.

4. CWJC No. 4902 of 1987: The court quashed the Tribunal's order dated 30-4-1987 and held that the petitioner is entitled to total exemption for L.S.H.S./F.O. used in the manufacture of ammonia, which is further processed into fertilizer, but not for ammonia sold in the open market.

5. CWJC No. 860 of 1991: The court directed the respondents to reconsider the impugned demands in light of this judgment and the Supreme Court decisions cited, giving the petitioner an opportunity to be heard before making any fresh demands.

Conclusion:
The court held that L.S.H.S./F.O. used for steam generation in the petitioner's fertilizer plant qualifies as 'feed stock' and is entitled to total exemption from excise duty under notification No. 147 of 1974. The orders of the Tribunal were set aside, and the Board's orders favoring the petitioner were restored. The court also directed the reconsideration of demands in light of this judgment.

← Previous Next →