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2022 (1) TMI 359 - AT - Central ExciseBenefit of area based exemption - Industrial Oxygen, Liquid Nitrogen and Nitrogen Gas are Industrial Gases based on atmospheric fraction - benefit of exemption under N/N. 49-50/2003-CE dt. 10.06.2003 denied on account of the fact that gases manufactured by the appellants are Inorganic Chemicals falling under Chapter 28 and are covered under the entry at S.No. 4 of the Annexure to the Notification No. 49/2003-CE dt. 10.06.2003 in negative list. For unit no. I - HELD THAT - To find that the product which is manufactured by the appellant is industrial gas, manufactured by way of atmospheric fraction, which specifically covers at S.No. 16 of the schedule, therefore, it is to be seen that whether the appellant is entitled for benefit under notification or not that product qualifies at S.No. 16 of the schedule of notification or S.No. 4 of the Annexure. S.No. 4 of the Annexure covers inorganic chemicals, although industrial gases are inorganic chemicals, but there is a specific entry at S.No. 16 of the schedule which is the appropriate classification of the said goods and the Hon ble Apex Court in the case of SPEEDWAY RUBBER CO. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH 2002 (5) TMI 51 - SUPREME COURT has observed that as per Rule 3(a) of Interpretation Rules of Central Excise Tariff Act, 1985, the heading which provides most specific description shall be preferred to the heading providing a more general description. In the case of MANGALAM ALLOYS LTD. VERSUS COMMISSIONER OF CUS., AHMEDABAD 2010 (4) TMI 493 - CESTAT, AHMEDABAD , this Tribunal has further observed that if the goods falls in two entries of the notification, the assessee is entitled to choose the entry which is more beneficially to the assessee. As per the stated facts herein above that the industrial gases are covered at S.No. 16 of the schedule of the said notification, which is a specific entry, therefore, the appellant is entitled for exemption under Notification No. 49/2003-CE dt. 10.06.2003 at S.No. 16 of the schedule. In these circumstances, it is held that the goods of the appellant i.e. industrial gases are not covered under Annexure to the notification at S.No. 4 of negative list - the appellant is rightly claim the benefit of exemption at S.No. 16 of the schedule of Notification No. 49/2003-CE dt. 10.06.2003 for unit no.I. With regard to Unit No. II - HELD THAT - The item manufactured by the appellant does not covered at S.No. 5 of the Annexure-1 (negative list) appended to Notification No. 50/2003-CE dt. 10.06.2003. Therefore, the appellant is entitled for benefit of exemption Notification No. 50/2003-CE dt. 10.06.2003 - the demand is sustainable against the appellant. Territorial Jurisdiction - HELD THAT - In the show cause notice, the issue of Territorial Jurisdiction is not a subject matter. Therefore, argument advanced by the ld. A.R. is beyond the scope of show cause notice. Therefore, the said argument is of no value. The appellant for unit no.I is entitled for benefit of exemption Notification No. 49/2003-CE dt. 10.06.2003 at S.No. 16 and for unit no.II, the appellant is entitled benefit of exemption Notification No. 50/2003-CE dt. 10.06.2003 as same does not fall under S.No. 5 of the Annexure-1 (negative list) of the said notification - Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Eligibility for area-based exemption under Notification No. 49-50/2003-CE. 2. Classification of industrial gases and dissolved acetylene gas. 3. Interpretation of specific vs. general descriptions in exemption notifications. 4. Applicability of extended period of limitation. 5. Clubbing of clearances for SSI exemption. 6. Location-based eligibility for exemption under Notification No. 50/2003-CE. 7. Entitlement to deductions and CENVAT credit. Issue-wise Detailed Analysis: 1. Eligibility for Area-Based Exemption under Notification No. 49-50/2003-CE: The appellant's two units, located in Himachal Pradesh, were denied benefits under Notification No. 49-50/2003-CE due to the classification of their products in the negative list. The Tribunal considered whether the products manufactured by the appellant, specifically industrial gases and dissolved acetylene gas, qualify for exemptions under the said notifications. 2. Classification of Industrial Gases and Dissolved Acetylene Gas: - Unit No. I: The appellant argued that industrial gases such as Industrial Oxygen, Medicinal Oxygen, Liquid Nitrogen, and Nitrogen Gas are 'Inorganic Chemicals' falling under Chapter 28 but should be classified under S.No. 16 of the schedule to Notification No. 49/2003-CE, which covers industrial gases based on atmospheric fraction. The Tribunal agreed, stating that the specific entry for industrial gases should prevail over the general description of inorganic chemicals in the negative list. - Unit No. II: The appellant contended that Dissolved Acetylene Gas, an organic chemical falling under Chapter 29, should not be classified under the negative list of Notification No. 50/2003-CE. The Tribunal found that the NIC classification code for basic inorganic chemicals (NEC) is 24117, while the appellant's product falls under 24111, thus not fitting the negative list criteria. 3. Interpretation of Specific vs. General Descriptions in Exemption Notifications: The Tribunal relied on the principle that specific descriptions in exemption notifications should take precedence over general descriptions. This principle was supported by precedents such as Hemraj Gordhandas vs. H.H. Dave and Speedway Rubber Co. vs. C.C.E., which state that the heading providing the most specific description should be preferred. 4. Applicability of Extended Period of Limitation: The appellant argued that the extended period of limitation should not be invoked as the issue involved interpretation of law. The Tribunal did not find sufficient grounds to uphold the extended period of limitation, as the case primarily involved classification and interpretation issues. 5. Clubbing of Clearances for SSI Exemption: The Tribunal addressed the issue of clubbing clearances from both units for SSI exemption under Notification No. 8/2003-CE. The aggregate value of clearances exceeded the threshold, disqualifying the appellant from SSI exemption. The Tribunal upheld the denial of SSI exemption based on aggregate clearances. 6. Location-Based Eligibility for Exemption under Notification No. 50/2003-CE: The Tribunal examined whether the appellant's unit location qualified for exemption under Notification No. 50/2003-CE. The Revenue's argument that the unit's location did not fall within the specified areas was dismissed as it was not raised in the show cause notice, making it beyond the scope of the proceedings. 7. Entitlement to Deductions and CENVAT Credit: The Tribunal noted that the appellant's claims for deductions and CENVAT credit were not substantiated with appropriate documentation or raised before the appellate authority. Consequently, these claims were not entertained. Conclusion: The Tribunal concluded that the appellant's Unit No. I is entitled to exemption under Notification No. 49/2003-CE for industrial gases, while Unit No. II is entitled to exemption under Notification No. 50/2003-CE for dissolved acetylene gas. The impugned order was set aside, and the appeals were allowed with consequential relief.
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