2008 (9) TMI 483 - AT - Central Excise

Appeal filed by the Revenue is against the order of the Commissioner (Appeals) granting the benefit of Notification No. 10/97-C.E., dt. 1-3-97 to the respondents in respect of Ammonium Chloride cleared to Vikram Sarabai Space Centre (Public funded research institution)- The respondents had cleared Ammonium Chloride to VSSC during May 06 to Jan 07 without payment of duty, claiming the benefit of Notification No. 10/97-C.E., ibid. The item was used as an ingredient for preparing Ammonium Per-Chlorate , an oxidizer used in solid propellant rockets for space research as per the end-use certificate issued by VSSC. - Admittedly, Ammonium Chloride was, ultimately, consumed in the rockets for research purposes. This squarely satisfies the obvious purpose intended under the Notification Hence benefit of Notification No. 10/97-C.E., is not deniable

Issues:
1. Benefit of Notification No. 10/97-C.E. for duty exemption on Ammonium Chloride cleared to Vikram Sarabai Space Centre (VSSC).
2. Interpretation of the term "consumables" under the Notification.
3. Application of ejusdem generis rule in determining the scope of "consumables."
4. Compliance with conditions specified in the Notification for duty exemption.
5. Comparison with a previous case involving similar duty-free supply of Ammonium Chloride to VSSC.

Analysis:

1. Benefit of Notification No. 10/97-C.E.:
The appeal filed by the Revenue challenged the order granting duty exemption on Ammonium Chloride cleared to VSSC under Notification No. 10/97-C.E. The respondents claimed exemption based on the use of Ammonium Chloride in preparing Ammonium Per-Chlorate for solid propellant rockets used in space research. The Tribunal noted that the material was indeed used for research purposes and consumed in the rockets, satisfying the purpose of the Notification. The Revenue did not dispute VSSC's eligibility for duty-free procurement, and all prescribed conditions were met, leading to the dismissal of the appeal.

2. Interpretation of "consumables" and ejusdem generis rule:
The dispute centered on whether Ammonium Chloride qualified as a "consumable" under the Notification. The appellant argued that the term should be construed in conjunction with the preceding items listed, implying a narrower scope. In contrast, the respondents contended that since Ammonium Chloride was consumed in rockets covered by the Notification, it should be considered a consumable. The Tribunal found that the material was consumed in the rockets for research, aligning with the Notification's intent, and rejected the appellant's restrictive interpretation.

3. Compliance with Notification conditions:
The Tribunal confirmed that the conditions specified in the Notification were met, including the production of the requisite certificate from VSSC by the respondents. This compliance further supported the decision to grant duty exemption on the cleared goods.

4. Comparison with prior case involving duty-free supply:
Reference was made to a previous case involving duty-free supply of Ammonium Chloride to VSSC, where the Revenue had accepted the material as exempt from duty. This precedent reinforced the Tribunal's decision to uphold the duty exemption in the present case, emphasizing consistency in treatment of similar transactions.

In conclusion, the Tribunal upheld the lower appellate authority's order, dismissing the appeal and affirming the duty exemption on Ammonium Chloride cleared to VSSC for research purposes in solid propellant rockets.

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