1985 (7) TMI 278 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 145/71 regarding excise duty exemption on Oxygen gas used in the manufacture of steel.

Analysis:
The judgment by the Appellate Tribunal CEGAT, New Delhi dealt with the interpretation of Notification No. 145/71 issued by the Government of India regarding the exemption of excise duty on Oxygen gas if used directly in the manufacture of steel. The case involved M/s Tata Iron and Steel Co. Ltd., Jamshedpur, engaged in the manufacturing of iron and steel, where Oxygen gas supplied by M/s Indian Oxygen Ltd. was essential in the manufacturing process. The appellants applied for an L-6 License to purchase Oxygen without excise duty payment to avail the benefit of the notification.

The dispute arose when the Superintendent of Central Excise started raising demands for excise duty on Oxygen gas used in Blast Furnaces, claiming it was for making iron and not steel. The appellants contended that the 'hot metal' produced in Blast Furnaces was directly utilized in the manufacturing process of steel, arguing that the manufacturing process of steel commenced from the production of 'hot metal.' However, the Appellate Collector, Central Excise, Calcutta rejected this argument, emphasizing the significance of the term 'directly' in the notification, thereby restricting the concession scope.

The appellants, dissatisfied with the Appellate Collector's decision, filed revision applications before the Government of India, which were transferred to the Tribunal for hearing as appeals. During the proceedings, the counsel for the appellants referenced a judgment by the Patna High Court in a similar case involving the same party, where it was held that Oxygen used in the manufacture of steel, starting from the melting of iron ore to the production of steel, was entitled to exemption from excise duty. In light of this precedent, the Tribunal set aside the impugned orders and allowed all three appeals with consequential relief.

In conclusion, the judgment clarified the interpretation of the notification regarding the exemption of excise duty on Oxygen gas used in the manufacture of steel, emphasizing the direct use of Oxygen in the steel manufacturing process. The decision was influenced by a previous ruling by the Patna High Court, which established the entitlement to exemption based on the integrated process involving Oxygen in steel production.