1987 (8) TMI 334 - AT - Central Excise

Summary

Issues: Classification of Lean Gas under Central Excise Tariff, Excisability of Lean Gas, Liability of Central Excise Duty on Lean Gas

Classification of Lean Gas under Central Excise Tariff:
The judgment revolves around the classification of Lean Gas under the Central Excise Tariff. The Assistant Collector classified Lean Gas under T.1. 11AA(2) and demanded duty from the appellant. The Collector of Central Excise (Appeals) upheld the classification, leading to the appeal before the Tribunal. The appellant argued that Lean Gas should be classified under the residuary Tariff Item 68, contending that it is merely a residue left after extracting LPG from natural gas and does not undergo manufacturing. The respondent, however, asserted that Lean Gas is distinct from natural gas, as evidenced by specific agreements and differences in composition. The Tribunal analyzed the arguments and concluded that Lean Gas is different in name, character, and use from natural gas, thus classifying it under Tariff Item 68.

Excisability of Lean Gas:
The core issue addressed in the judgment is the excisability of Lean Gas. The appellant contended that Lean Gas should not attract central excise duty as it is a residue obtained without any manufacturing process. They argued that Lean Gas is essentially natural gas from which LPG has been extracted, maintaining that it does not fulfill the criteria for excisability under the Central Excises & Salt Act, 1944. Conversely, the respondent argued that Lean Gas results from a distinct process of extracting LPG from natural gas, making it a product subject to excise duty. The Tribunal examined the nature and composition of Lean Gas, ultimately determining that it undergoes a manufacturing process and is excisable under the Act.

Liability of Central Excise Duty on Lean Gas:
The judgment also addresses the liability of central excise duty on Lean Gas. After establishing that Lean Gas is classifiable under Tariff Item 68, the Tribunal held that the appellant would be eligible for any exemption notifications applicable under this classification. Consequently, the previous classification under TI 11A was set aside, and Lean Gas was classified under TI 68, granting the appellant the benefit of relevant exemption notifications. The appeals were partly allowed based on this classification and liability determination.

This comprehensive analysis of the judgment highlights the key issues of classification, excisability, and duty liability concerning Lean Gas under the Central Excise Tariff, providing a detailed overview of the arguments presented and the Tribunal's findings on each issue.