1996 (1) TMI 222 - AT - Central Excise

Summary

Issues:
1. Liability to pay duty on ammonia used in the manufacture of urea for non-fertilizer purposes.
2. Admissibility of benefit under Notification No. 40/85 for ammonia used in the manufacture of non-fertilizer products.
3. Eligibility for exemption under Notification No. 217/86 for the period prior to 1-3-1990.

Analysis:

Issue 1:
The appeals involved the question of the liability of M/s. Gujarat State Fertilisers Company Ltd. to pay duty on ammonia used in the manufacture of urea for purposes other than as fertilizers. The Collector of Central Excise had ordered the recovery of Central Excise duty based on the use of ammonia in non-fertilizer products.

Issue 2:
The main contention was regarding the admissibility of the benefit under Notification No. 40/85 for ammonia used in the manufacture of non-fertilizer items. The appellant argued that the notifications did not require the actual use of products as fertilizers for availing benefits. The Collector relied on Tribunal decisions to support the denial of benefits under the said notification.

Issue 3:
Another issue was the eligibility for exemption under Notification No. 217/86 for the period prior to 1-3-1990. The appellant had not claimed this benefit earlier or filed any classification list in that regard. The Collector had rejected their alternative plea based on non-filing of the classification list for the relevant period.

The Tribunal examined the arguments presented by both sides and reviewed the record. It noted the previous Tribunal decisions and upheld the Collector's decision regarding the inadmissibility of benefits under Notification No. 40/85 for ammonia used in non-fertilizer production. However, concerning the benefit of exemption under Notification No. 217/86, the Tribunal found that the approval of the classification list subsequent to 1-3-1990 should apply to the period covered by the show cause notice. The Tribunal emphasized that failure to file a classification list should not deprive the appellants of the benefit of the notification while responding to the show cause notice. Therefore, the appeals were allowed on the plea for grant of exemption under Notification No. 217/86, dated 2-4-1986.

In conclusion, the appeals were disposed of based on the above findings, allowing the benefit of exemption under Notification No. 217/86 while upholding the decision on the inadmissibility of benefits under Notification No. 40/85 for ammonia used in non-fertilizer production.