2004 (6) TMI 91 - AT - Central Excise

Scope of adoption of any other treatment to render the product marketable to consumer -Interpretation of Note 10 to Chapter 28 - Activity of transferring of ammonia gas from bulk containers into smaller container is manufacturing process Activity or not - Liability of central excise duty on liquid Ammonia obtained by dissolving un-hydrous Ammonia in water - HELD THAT - We find that the scope of the words 'adoption of any other treatment to render the product marketable to consumer' has been examined by the Tribunal in case of Lakme Lever Ltd. v. CC, Mumbai 2000 (10) TMI 96 - CEGAT, MUMBAI wherein it was held that if the product were already marketable then any amount of treatment to enhance its marketability would not amount to manufacture within the meaning of this note. We find that Board in its Circular No. 236/70/96-CX., dated 1-8-96 had clarified that dissolving ammonia into water does not amount to manufacture. We also find that by dissolving ammonia into water its marketability is not enhanced since this liquid ammonia is obtained from duty paid un-hydrous ammonia. Therefore, there is no further duty liability which arises on this liquid ammonia. Therefore, we do not find any merit in the appeal of revenue. We find that the Commissioner (Appeals) has already given a very detailed order on the activity of transferring un-hydrous ammonia from tanker to cylinders not treating it as manufacture and thus setting aside the order of the original authority. We are fully convinced with the order of the Commissioner (Appeals) and we do not find any merit in the appeal of the Revenue and the same is rejected.

Summary

Issues involved: Interpretation of Note 10 to Chapter 28 of Schedule to Central Excise Tariff Act, 1985 regarding liability of central excise duty on liquid Ammonia obtained by dissolving un-hydrous Ammonia in water.

Summary:
The appellants, traders in un-hydrous Ammonia, were charged with central excise duty liability on liquid Ammonia produced by dissolving un-hydrous Ammonia in water. The Revenue argued that this process falls under the definition of "the adoption of any other treatment to render the product marketable to customers" as per Note 10 to Chapter 28, thus attracting duty liability. However, the respondents contended that dissolving un-hydrous Ammonia into water does not amount to manufacture as clarified by Circular No. 236/70/96-C.Ex. and supported by a Tribunal decision. The Tribunal found that the process of dissolving Ammonia in water did not enhance its marketability since the liquid Ammonia was derived from duty paid un-hydrous Ammonia. Therefore, no further duty liability arose on the liquid Ammonia. The Tribunal upheld the order of the Commissioner (Appeals) who had previously ruled in favor of the appellants, rejecting the appeal of the Revenue.

In conclusion, the Tribunal determined that the process of dissolving un-hydrous Ammonia in water to produce liquid Ammonia did not amount to manufacturing under Note 10 to Chapter 28. The Tribunal relied on legal interpretations and precedents to support its decision, ultimately rejecting the Revenue's appeal and upholding the order of the Commissioner (Appeals).