9911796707
TMI Blog1990 (5) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... , by this order, to give our reasons therefor. 2. Steel Authority of India Ltd., ( SAIL , for short) has a plant at Rourkela which is engaged in the manufacture of fertilizers. For this purpose, SAIL was eligible and entitled to obtain raw naphtha, excisable under item No. 6 of the erstwhile Central Excise Tariff Schedule of 1944 at the material time, at a concessional rate of duty in terms of Central Excise Notification No. 187/61 dated 23-12-1961, as amended from time to time. The conditions subject to which the concessional rate of duty was admissible were :- (i) it is proved to the satisfaction of an officer not below the rank of an Assistant Collector of Central Excise that such raw naphtha is intended for use in the manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f naphtha was further high because gases produced (out of raw naphtha) had to be vented due to acute power crisis causing interruption/stoppages of down stream units of the plant. It was submitted that the two naphtha reforming plants have provisions in the system for automatic venting of gases, in the event gas formed cannot travel forward due to non-availability of power for operating the down stream plants, and excessive pressure build up. On many occasions gases are required to be vented out from the naphtha reforming plant when the said gases cannot be sent down stream plants due to non-availability and low interrupted and uncertain power supply or any other operational or maintenance problems in the plant. Moreover, the naphtha reform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notices. Though the orders touched on several other aspects also, what we are concerned with now is the demand for duty on naphtha which was consumed but without resulting in production of fertilizer. The matter was carried in appeal to the Collector (Appeals). SAIL also sought waiver of deposit of the adjudged duty amount of Rs. 4,32,95,253.86. The Collector (Appeals) passed an order on 29-5-1989 directing SAIL to make a deposit of Rs. 4 crores by 31-7-1989. He later allowed extension of time upto 31-3-1989. Thereafter, by letter dated 8-9-1989, a hearing on merits was fixed for 22-9-1989, subject to production of proof of deposit of the said amount. SAIL did not appear for the hearing on 22-9-1989 nor did they produce the requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s was an unavoidable technological necessity has not been disputed by the Revenue. This Tribunal had occasion to deal with cases where fertilizer plants, before being commissioned, had necessarily to be put through pre-commissioning trial runs. And, in these trial runs, the use of the concessional rated input did not result in production of fertilizer. Yet, it was held that such use should be deemed to be use in the manufacture of fertilizer. It is to be noted that the Ministry of Finance (Department of Revenue) had also clarified in a circular dated 22-7-1974 to Collectors that naphtha used during trial run and commissioning of fertilizer plants was eligible for the duty concession. 5. The principle should, in our opinion, apply in the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shells used as fuel in the kiln could be said to have been used in the manufacture of tiles. The Court noted that cashew shells did not get transformed into the end product and held that goods used for ancillary purposes like fuel in the process of manufacture did not fall within Section 5A(1) of the Act. The same ruling was given in respect of lime shell and consumed stores which-had been used only in the maintenance of the kiln and the factory. The facts in the present case are distinguishable and, with great respect, we are of the view that the cited judgment does not apply. Here naphtha was procured with the intention of manufacturing fertilizer and but for the shut-down of the fertilizer plant owing to power problems, would have been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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