1998 (3) TMI 227 - AT - Central Excise

Summary

Issues:
Eligibility of raw naphtha for concessional duty under Notification No. 187/61 and Notification No. 75/84 for intended use in the manufacture of fertilizer.

Analysis:
The appeal filed by the Revenue concerns the eligibility of raw naphtha brought into the respondents' factory for the manufacture of fertilizer under specific notifications for a concessional rate of duty. The department contended that the products manufactured using the raw naphtha were not being used as fertilizers for agricultural purposes, leading to demands for payment of differential duty. The Assistant Collector confirmed the demands, but the Collector (Appeals) allowed the appeal, stating that the goods qualified as fertilizer even if they could be used for industrial purposes. This appeal by the Revenue challenges the Collector (Appeals) decision.

Upon hearing arguments, it was noted that a similar issue regarding the benefit of Notification No. 75/84 had been addressed by the Supreme Court in a previous case involving the same assessees. The Supreme Court ruled that the assessees were eligible for the benefit of the notification as the end-use condition was satisfied through the manufacturing process, even if the final product could be used for industrial purposes. The Court emphasized that the intention of the government should not be inferred beyond the explicit terms of the notification. The assessees were granted the benefit of the notification based on the continuous manufacturing process leading to the production of fertilizer.

In the present case, the raw naphtha is used to manufacture ammonia, which is then used in the production of Di-ammonium Phosphate, Ammonium Sulphate, and Urea, all recognized as fertilizers. Despite the subsequent sale of these products for industrial or commercial use, the respondents are deemed eligible for the notification benefit as the conditions are met through the manufacturing process. Following the Supreme Court's precedent, the Tribunal upheld the Collector (Appeals) decision, rejecting the Revenue's appeal and affirming the eligibility of the respondents for the concessional duty under the notifications.