2001 (9) TMI 147 - AT - Central Excise

Summary

Issues involved: Determination of whether lean gas is a by-product or a final product for the purpose of excise duty liability.

Summary:
The appeals before the Appellate Tribunal CEGAT, Mumbai involved the classification of lean gas as either a by-product or a final product in the context of excise duty liability. The Gas Authority of Indian Ltd. (GAIL) purchased natural gas from ONGC, processed it to extract liquefied gas (LPG), and produced lean gas as a residual product. The dispute arose when excise authorities issued show cause notices alleging duty evasion on lean gas. The authorities contended that lean gas was a final product subject to duty, while the appellants argued it was a by-product exempt from duty under Rule 57D.

The Commissioner and the Commissioner (Appeals) upheld the duty liability on lean gas, denying the benefit of Rule 57D. However, the appellants argued that lean gas was a by-product based on commercial considerations and manufacturing processes. They presented evidence, including registration certificates and project reports, supporting their classification of lean gas as a by-product. The appellants also cited a relevant Tribunal judgment in a similar case to support their argument.

Ultimately, the Appellate Tribunal allowed the appeals, ruling in favor of the appellants based on the classification of lean gas as a by-product. The Tribunal emphasized that the benefit of Rule 57D applied in this case, setting aside the duty demands made by the excise authorities. The judgment highlighted the importance of correctly categorizing products as final products or by-products for excise duty purposes, ensuring compliance with relevant rules and regulations.