1997 (7) TMI 334 - AT - Central Excise

Sulphuric acid intended for use in the manufacture of fertiliser exempt under Notification No. 81/75-C.E.

Summary

Issues:
- Appeal against denial of exemption claimed under Notification No. 81/75 by Additional Collector of Central Excise, Surat.
- Interpretation of Notification No. 81/75 regarding the use of sulphuric acid in the manufacture of fertilizers.
- Application of Chapter X procedure for use of sulphuric acid elsewhere in the factory of production.

Analysis:
The appeal was filed challenging the decision of the Additional Collector of Central Excise, Surat, denying the exemption claimed under Notification No. 81/75. The appellant, engaged in the manufacture of cyanides, received sulphuric acid and ammonia for the final product's manufacture. The adjudicating officer held that the appellant used sulphuric acid and ammonia for purposes other than manufacturing fertilizers, leading to the duty payment demand on sulphuric acid. The appellant argued that the Notification required the sulphuric acid to be "intended for use in the manufacture of fertilizers," and they should be entitled to the exemption as they had used the acid, albeit excessively. The appellant relied on legal precedents like IFFCO v. CCE and Steel Authority of India Ltd. v. CCE to support their claim.

The Departmental Representative reiterated the grounds of the adjudicating order, maintaining that the appellants were not eligible for the exemption based on the facts presented. The Tribunal analyzed Notification No. 81/75, which exempted sulphuric acid used in fertilizer manufacturing, subject to the Assistant Collector's satisfaction and compliance with Chapter X procedures for use elsewhere in the factory. Referring to a similar case involving Steel Authority of India, the Tribunal ruled in favor of the appellants, setting aside the original order. The Tribunal applied the precedent's ratio decidendi to hold that the appellants were entitled to the benefit of the notification, as the wording of Notification No. 81/75 was akin to the one in the Steel Authority of India case. Consequently, the appeal was allowed, with any consequential relief granted to the appellants.