1992 (3) TMI 179 - AT - Central Excise

Summary

Issues:
Eligibility of Low Sulphur Heavy Stock (LSHS) for exemption under Notification No. 147/74 and Notification No. 356/77 for use in the generation of steam for the manufacture of fertilizers.

Detailed Analysis:

The judgment before the Appellate Tribunal CEGAT, New Delhi involved the determination of whether Low Sulphur Heavy Stock (LSHS) used for the generation of steam qualifies for exemption under Notification No. 147/74 and Notification No. 356/77. The respondents, engaged in fertilizer manufacturing, obtained an L6 License to bring LSHS under Chapter X procedure for use as feedstock in fertilizer production without paying central excise duty. The issue arose when the adjudicating authority demanded duty on the LSHS used for steam generation, arguing that the steam was not directly used in fertilizer production. However, the Collector (Appeals) ruled in favor of the assessee, stating that steam, being an essential raw material, need not be physically present in the final product but must be used in the manufacturing process.

In a previous case, the Tribunal had held that LSHS used for steam generation does not qualify as feedstock in fertilizer production. This decision was based on the interpretation of "feedstock" as raw material delivered to a machine for processing, as per the Neyveli Lignite Corporation case. The Tribunal's ruling in the present case aligned with the earlier decision, emphasizing that LSHS used for steam generation does not meet the criteria for exemption under Notification No. 147/74. The Tribunal rejected the attempt to distinguish the cases based on the meaning of feedstock under the glossary of petroleum products, affirming that the earlier decision applied to the current appeal.

Ultimately, the Tribunal upheld the precedent set by previous judgments and concluded that LSHS used for steam generation does not qualify for the concessional rate of duty under Notification No. 147/74. The impugned order was set aside, and the appeal was allowed, with the cross objection deemed to abate.