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TMI Blog1985 (3) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... ul. In Item 4 of the table annexed to this notification it is indicated that the Government exempted oxygen from the whole of the duly of excise leviable thereon if it is used in the manufacture of fertilizer falling under Item 14 HH of the First Schedule of the Central Excises and Salt Act. As per statistics furnished by them they started consuming oxygen in their gasification plant from the month of April 1978 but the production of fertilizer in the factory has not yet started even today (July 79). In other words the Talcher Fertilizer Plant has been consuming oxygen in their gasification plant for the last more than one year without producing any fertilizer. Since the condition of exemption of oxygen from duty under the above-mentioned n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ented by Shri N.V.R. Iyer and S.N. Khanna. Mr. Oberoi argued that the oxygen that was produced was not excisable for the purpose of the Central Excises Act as it was not a commercial commodity and had not been bottled or compressed and could not have been taken to the market for sale: its purity was only around 96%. In view of the Supreme Court judgment in the DCM case - 1977 E.L.T. J199, the South Bihar Mill AIR 1968 S.C. 922, it can be confidently said that this oxygen was not known to the market as an oxygen. The oxygen went at least upto the synthesis gas stage. Unfortunately, no fertilizer emerged because the plant was still very new and it had not yet been stabilised. This is a problem that all new fertilizer plants have-the gestation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause oxygen had a 96% purity it would not be classifiable as oxygen. There are different grade of oxygen, some purer than others. Oxygen used in medical application or in laboratory would naturally have greater purity than other kinds used in industries and less sensitive work. The Supreme Court judgment about marketability of a product must be understood as applicable to industrial use also. If the oxygen finds industrial use, then it has marketability, even if its purity values are below the highest standard. 6. They also argued that oxygen must be used in the production of fertilizer. Intention is not enough, because unlike Notification No. 187/61-C.E. the 1971 exemption was more stringent. It demands use and this means only actual u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of fertilizer. We think we can. 9. At least up to the gasification we know the oxygen was used. There is no point in gasification using oxygen to reach this stage, if the aim was not the production of fertilizer. We, of course, do not know why no fertilizer came out or what could have happened along the way. The oxygen was used in the manufacture of fertilizer but unfortunately the fertilizer did not materialise. This phenomenon is common in new plants and this is not the first time we have had a problem of this kind reach us. It is useful to bear in mind that in this kind of production, processes can go awry and there are cases, even in older plants in active production when batches for no reason that anyone can discover are ruined. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . which was refused by the Collector should be given on the disputed quantity of 6,572,000NM3 oxygen. 10. This being our decision we shall have to reject the other arguments by M/s. Fertilizer Corporation to the effect that the oxygen was not oxygen of the excisable variety and that its purity stood in the way of its being excisable. If M/s. Fertilizer Corporation wants the exemption we have given it; but only because - it is oxygen. We can see no logic in extending the exemption on oxygen to a gas that is not oxygen. Indeed M/s. Fertilizer Corporation should not have tried to have it all their way. It is not right for them to deny the gas was excisable oxygen and they ask for an exemption meant for the excisable oxygen. Not, let us dec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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