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TMI Blog2009 (3) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... he said release of the same into the atmosphere amounts to ‘removal’ in terms of the provisions of rule 9(1) of Central Excise Rules, 1944. – Held that the integrated plant storage is also a part of manufacturing process and that too, in the case of hazardous gas, like ammonia - The said circular is binding on the Revenue and has the force of law - The said circular is clarificatory of law and states in unambiguous terms that the gases falling under chapters 27, 28 and 29 produced in an factory and allowed to escape in atmosphere (whether by flare system or otherwise) are not liable to duty as these were not be considered as manufactured products and amounting to clearance. - Revenue’s further contention that it is doubtful whether the ammo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 1-10-1996. It was stated that ammonia gas, which is stored in the storage tank, is either manufactured within the factory or procured from outside. The ammonia stored in the storage tank attracts duty @ 16% ad valorem, but for notification No. 4/97, dated 1-3-97, which exempts ammonia if used in the manufacture of fertilizers. Since the quantity of ammonia, which has been released into the atmosphere, has lot been used in the manufacture of fertilizers, it attracts duty and the said release of the same into the atmosphere amounts to 'removal' in terms of the provisions of rule 9(1) of Central Excise Rules, 1944. 5. Accordingly, a show cause notice dated 4-1-2002 was issued to the respondents demanding duty of Rs. 71,887/- for the period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng under Chapter 27, 28 or 29 produced in a factory and allowed to escape in the atmosphere by flare system or otherwise were exempt from excise duty vide S. No. 14 of the notification. The exemption was reviewed during the budget and it was felt that gases escaping in the atmosphere by flare system or otherwise may not be considered as "manufactured" products and amounting to clearance and as such there may not be any need for prescribing separate exemption from the duty and hence the reference to the above mentioned exemption was deleted. Accordingly, it has been clarified in para 11.8 of Budget Instructions sent alongwith Commissioner (TR)'s D.O. letter No. 334/14/95, dated 23rd July, 1996 that gases falling under Chapter 27 produced in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the Notifications have been rationalized and reviewed to avoid any need of prescribing separate exemption/notification for the purpose. The said circular is clarificatory of law and states in unambiguous terms that the gases falling under chapters 27, 28 and 29 produced in an factory and allowed to escape in atmosphere are not liable to duty as these were not be considered as manufactured products and amounting to clearance. 11. The reliance placed by the Revenue on the Supreme Court judgment in the case of Vazir Sultan Tobacco Co. Ltd. (supra) is not apt as the issue of venting out of the gases in the atmosphere, their exemption in terms of Notification No. 75/94, dated 1-3-94 and CBEC's clarification in that context that the gases p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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