1993 (10) TMI 196 - AT - Central Excise

Summary

Issues: Eligibility of exemption under Notification No. 40/85 for ammonia used in the manufacture of melamine and the benefit of exemption under Notification No. 217/86 for various products including melamine.

Analysis:

The applicants in this case are involved in manufacturing ammonia for use in fertilizers and other products, including melamine. They sought exemption under Notification No. 40/85 for ammonia used in fertilizer production and under Notification No. 217/86 for ammonia used in various products, including melamine. The Department issued a show cause notice challenging the exemption under Notification No. 40/85 based on a Tribunal decision. The applicants argued that they had filed a classification list in 1990 claiming both exemptions, which was approved in 1992. They also contended that ammonia used in the manufacture of melamine was covered under Notification No. 217/86. However, the Asstt. Collector and the Collector (Appeals) did not address this issue, leading to the appeal before the Tribunal.

The Department argued that the applicants initially claimed that molten urea, used in melamine production, was a fertilizer eligible for exemption under Notification No. 40/85. However, the applicants later changed their stance, seeking the benefit of Notification No. 217/86. The Department contended that since ammonia was used only in the manufacture of molten urea and not directly in melamine production, the benefit under Notification No. 217/86 should not apply.

After considering both parties' arguments, the Tribunal found that the authorities below should have examined the eligibility for the benefit of Notification No. 217/86. The Tribunal noted that the classification list had been filed, claiming this benefit, and a specific plea was made in response to the show cause notice. The Tribunal observed that the applicants appeared to have a case for the benefit of Notification No. 217/86 concerning the ammonia used in melamine production. Despite the Department's objection that the ammonia was used in molten urea, the Tribunal found that it was also an input covered by the same notification and eligible for use in melamine manufacturing. Consequently, the Tribunal directed the applicants to provide a personal bond covering the duty amount within four weeks. Failure to comply would result in the rejection of their appeal. Upon furnishing the personal bond, the duty amount recovery was stayed and waived.

In conclusion, the Tribunal's decision focused on the eligibility of the applicants for the benefit of Notification No. 217/86 regarding the use of ammonia in the manufacture of melamine, emphasizing the need for a thorough examination of the classification list and the specific pleas made by the applicants.