1998 (8) TMI 203 - AT - Central Excise

Summary

Issues:
1. Whether the manufacturers are entitled to the concessional rate of duty for raw naphtha and sulphuric acid used in the manufacturing process.
2. Eligibility for exemption from duty under specific notifications for the final products.

Analysis:

1. The main issue in the appeals was whether the manufacturers were entitled to the concessional rate of duty for raw naphtha and sulphuric acid used in the production of di-ammonium phosphate, ammonium sulphate, and urea. The Revenue argued that the benefit was only applicable if the products were cleared as soil fertilizers, and since a portion was cleared for chemical use, the benefit was not available. The contention was that differential duty or duty at the tariff rate should be paid by the manufacturers.

2. The Tribunal considered the arguments presented by both sides. The Revenue contended that the benefit of concessional duty/exemption was only for products used as fertilizers. However, the manufacturers cited previous judgments, including a Supreme Court decision and Tribunal rulings, in their favor. The Apex Court had previously held that the benefit of Notification 75/84 was available since the products manufactured, including molten urea, were considered fertilizers. The Court extended the benefit of exemption to ammonia used in the manufacturing process, satisfying the conditions for total exemption.

3. The Tribunal noted that the final products cleared by the manufacturers were di-ammonium phosphate, ammonium sulphate, and urea, similar to the products in the previous judgments. The benefit of exemption under Notification 81/75 was also linked to the use of items in the manufacture of fertilizers. Therefore, based on the precedent set by previous judgments, the Tribunal ruled in favor of the manufacturers. They were deemed eligible for the concessional rate of duty for raw naphtha and total exemption from duty for sulphuric acid used in manufacturing fertilizers. Consequently, the impugned orders were upheld, and the appeals were rejected.