1995 (10) TMI 114 - AT - Central Excise

Issues Involved:
1. Eligibility for exemption under Notification No. 276/67-C.E. for Methane.
2. Validity of the declaration of the appellant's premises as a refinery.
3. Interpretation of Rule 140(2) of the Central Excise Rules, 1944.
4. Applicability of the Government of India's order declaring the appellant's premises as a refinery.

Issue-wise Detailed Analysis:

1. Eligibility for exemption under Notification No. 276/67-C.E. for Methane:
The appellants claimed exemption for Methane under Notification No. 276/67-C.E., asserting that Methane, produced from raw Naphtha, is an intermediate product used in the manufacture of Ammonia or Fertilizer. The Assistant Collector and the Collector (Appeals) denied this exemption, arguing that the declaration of the appellant's premises as a refinery was limited to raw Naphtha and did not extend to Methane. The Tribunal concluded that the exemption applies to all goods produced in a declared refinery, including Methane, as long as they fall under Chapter 27 of the Central Excise Tariff Act, 1985.

2. Validity of the declaration of the appellant's premises as a refinery:
The appellants presented an order from the Government of India, dated 23-7-1973, declaring their premises as a refinery for raw Naphtha. The lower authorities argued that this declaration lapsed with the rescission of Notification No. 275/67-C.E. and was not applicable to Methane. The Tribunal found that the order declaring the premises as a refinery had not been revoked and remained valid. Thus, the appellant's premises continued to be recognized as a refinery for the purpose of exemption under the relevant notification.

3. Interpretation of Rule 140(2) of the Central Excise Rules, 1944:
The appellants contended that Rule 140(2) does not require a separate declaration for each type of product manufactured in a refinery. The Tribunal agreed, interpreting that the rule allows a refinery to be deemed a warehouse for all goods processed or manufactured within it. Consequently, the appellants' refinery status applied to all goods derived from raw Naphtha, including Methane.

4. Applicability of the Government of India's order declaring the appellant's premises as a refinery:
The lower authorities interpreted the Government of India's order as specific to raw Naphtha, excluding Methane. The Tribunal disagreed, stating that the order, issued under Rule 140, was comprehensive, covering all goods manufactured from raw Naphtha in the refinery. The Tribunal emphasized that the order should be read harmoniously with Rule 140, confirming the refinery status for all relevant products, including Methane.

Conclusion:
The Tribunal set aside the lower authorities' orders, holding that the appellants' premises were validly declared as a refinery and that Methane, being an intermediate product produced from raw Naphtha, was eligible for exemption under Notification No. 276/67-C.E. The decision underscored the comprehensive nature of the refinery declaration and the correct interpretation of Rule 140(2) in the context of the Central Excise Rules, 1944.

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