2019 (9) TMI 290 - AT - Customs

Import of catalyst called Petromax-MD for use in the production of other final product manufactured in FCC unit of its refinery - benefit of N/N. 228 of notification 21/02-Cus dated 01/03/2002, available to all goods specified in entry no. 45 of List 17 - Revenue submits that the entry no. 45 of list 17 of Sno. 228 of notification no. 21/2002-Cus is unambiguous, according to which, only those goods are exempted which are used for setting up of Crude Petroleum Refinery . It is beyond doubt that catalyst which is used for production of final products is not used for setting up of refinery. HELD THAT - It is a case of the appellant that the goods is used as consumable for running, repair or maintenance of the goods specified in list - We are of the view that the use of goods for running, repair or maintenance of the goods specified in the list denotes that the same should be used in the setting up for crude petroleum refinery whereas the product in question, i.e. Petromax-MD is not used for running, repair and maintenance of the plant. But it is used as input consumable in the production of final product. Therefore, the goods in question is not covered under entry no. 45 of List 17 of S. no. 228 of N/No. 21/2002-Cus. dated 01/03/2002. Exemption rightly denied - appeal dismissed - decided against appellant.

Summary

Issues:
- Interpretation of exemption notification for goods used in setting up a petroleum refinery
- Application of exemption for consumables used in production process

Interpretation of Exemption Notification:
The case involved the import of a catalyst called "Petromax-MD" for use in the production of final products in an existing refinery. The appellant claimed exemption under a specific notification, but the Adjudicating Authority denied it, stating that the goods were not required for setting up a petroleum refinery. The appellant argued that their capacity expansion from 10MMTPA to 220MMTPA made them eligible for the exemption, citing precedents and circulars. They emphasized that the notification should be read as a whole to avoid rendering any provision absurd or redundant. The Tribunal analyzed the exemption criteria, noting that the goods imported were consumables for the production process, not for setting up the refinery. Despite reliance on a previous judgment, the Tribunal held that the goods did not fall under the specific exemption entry, leading to upholding the denial of exemption.

Application of Exemption for Consumables:
The Tribunal examined whether the catalyst imported by the appellant, used in the production process, qualified for exemption under the notification. While the appellant argued that the goods were consumables for running, repair, or maintenance of the refinery, the Tribunal found that the goods were not used in such a manner but rather as input consumables in the production of final products. By distinguishing between goods used in setting up a refinery and those used in its operation, the Tribunal concluded that the catalyst did not meet the criteria for exemption under the specific entry of the notification. Consequently, the Tribunal upheld the denial of exemption, dismissing the appeal.

This detailed analysis of the judgment highlights the issues of interpretation of the exemption notification and the application of the exemption for consumables in the production process, providing a comprehensive understanding of the legal reasoning and decision-making process involved in the case.