9911796707
TMI Blog1990 (8) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in exercise of powers conferred under Section 35E(1) and it is an order by which the Collector of Central Excise, Ahmedabad has been directed to file an application before the Tribunal for looking into the legality and propriety of an adjudication order dated 12-2-1988 passed by the Collector of Central Excise Customs, Ahmedabad in the case of M/s. Indian Farmers Fertilizer Co-operative Ltd. (IFFCO). The brief facts of the case leading to this application under Section 35E are that IFFCO manufactures fertilizers falling under the erstwhile Tariff Item 14HH and were availing of exemption under Notfn. 187/61 dated 23-12-1961 under which raw naptha is exempt from payment of so much of excise duty leviable thereon as in excess ofRs. 4.15 per KL on condition that the Collector of Central Excise is satisfied that such raw naptha is intended for use in the manufacture of fertilizers and the Chapter X procedure is followed. Therefore, the concession is available, according to the department, only if raw naptha was used in the manufacture of Ammonia which was further used in the manufacture of fertilizers. The departmnent s case is that IFFCO were manufacturing ammonia, a part of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent was part of the integrated process of manufacture of Ammonia, is not technically correct leading to the present appeal by the Collector before the Tribunal. 2. In the other three appeals, by the common order, other Collector of Central Excise (Appeals) Bombay had upheld the Asstt. Collector s order by which the Assistant Collector had held that use of Ammonia in the inert gas plant, treatment of water and treatment of effluents cannot be considered as used for the manufacture of fertilizers. IFFCO, being aggrieved by this order have filed three separate appeals. 3. Shri Lachman Dev, the learned consultant, appearing for IFFCO submitted that the order of the Collector of Central Excise, Ahmedabad holding that use of Ammonia for gas generation and purification of water was an integrated process of manufacture of fertilizer needs no modification. He referred in this context to a clarification issued by the Central Board of Excise Customs dated 29-5-1970 wherein the Board had said that the exemption under Notification 187/61 is open to all raw naptha, whether used as feed stock or as process fuel, so long as it is proved to the satisfaction of the Collector that the same is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Sec. 11-A is not available to the department in this case and the Collector himself in his adjudication order has given such a finding as for the demand being made under Rule 196 of Central Excise Rules, the learned consultant contended that this rule was not invoked in the Show Cause Notice. 4. Shri Narasimha Murthy, the learned Departmental Representative appearing for the department pointed out that in the Show Cause Notice issued under Section 11-A was cited only in view of the remand order by the Collector (Appeals) but the adjudicating Collector had held that the limitation under that Section will not apply as it was a case of demand under Rule 196 being essentially a case of excisable exempted material not accounted for. In such a situation, according to the department, Section 11-A does not apply. As regards the eligibility of raw naptha used in the production of Ammonia which is utilized for purging the pipe line and for water treatment, the learned DR pointed out that purging of the pipe line and process equipment is a stage prior to the manufacture itself i.e. the stage of start up of the plant which is, therefore, not directly connected with manufacture. It is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... free of oxygen and maintained in that condition during the various stages of testing and commissioning . This would indicate that the use of Ammonia is essential for the maintenance of the plant and equipment and is meant for testing and commissioning of the plant. Coming to the use as a water treatment chemical, it is observed that the water available from tube wells is not of high purity and, therefore, it has to be purified for which Ammonia is used as a water treatment material by ION exchange method. What is the purpose of this water treatment? It is for ensuring high purity water. Water feed is used in the boilers and has to be of high purity so as to prevent the formation of scales, corrosion and other types of damage to the boilers and pipe lines, which is, again, essential and useful for the maintenance of the machinery, namely, the boiler and the pipe lines and the process equipment. What is required is water treatment to remove from it impuiities, for which water treatment chemicals are available, and it is only that IFFCO has chosen to use Ammonia itself for water treatment by ION exchange method. Therefore, the purpose of the water treatment being in our view, essentia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lable under the said notification provided the raw naptha was used in the manufacture of Ammonia, which was further used in the manufacture of fertilisers. M/s. IFFCO Ltd. Kalol were manufacturing Ammonia in their factory, which was put to different uses apart from its use in the manufacture of fertilizers for which they had obtained L-6 licence and were availing of the benefit of aforesaid exemption under Notification No. 187/61. They had applied to the Collector of Central Excise, Ahmedabad on 12-6-1974 for amending their L-6 licence for diversion of a part of Ammonia obtained from raw naptha. Under their L-6 licence for non-fertiliser purposes on the understanding that they would pay pro-rata duty on raw naptha so used in the manufacture of Ammonia diverted to non-fertilizer purpose at normal rate without any concession. Necessary permission to that effect was granted by the Collector and this fact was also duly incorporated in their L-6 licence. 3. Whereas on s.c.rutiny of records, it was observed that the assessee was removing Ammonia for uses other than fertilisers i.e. they had used some quantity of Ammonia in off site plants i.e. Inert Gas Plant, Water Treatment Plant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out and loses control over the disposal of the goods. The gratuity achieves completion only by the use of the goods, and use is beyond the manufacturer s power. The receiver of the gratuity, in fact, is not the manufacturer but the buyer, because the manufacturer sells the goods, less the duty which, even when it reaches him from the buyer, is rerouted to the exchequer. Since it is the buyer s use that consummates and concludes the exemption process, it is in the fitness of things that he should also be the one who must ultimately answer for the duty. 12. The time limit that the law provides for demands is applicable only to the factory that manufactures the goods. For example, time limit must start ticking from the so-called relevant date. None of the relevant dates can fit a demand under Rule 196. The time limit provided by Section 11-A of the Act cannot fence these demands in". Therefore, we do not find any substance in the arguments that the demand cannot be sustained under Rule 196. The appeal of the department is only to the extent of the correctness of the Collector of Central Excise, Ahmedabad s adjudication holding that in the Off-site plant, usage of Ammonia is in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
