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2013 (3) TMI 500 - CESTAT NEW DELHICenvat credit denied on MDEA not being a input eligible - refinery of the appellant company at Panipat where the crude oil is refined for production of motor spirit, high speed diesel oil (HSD), Superior Kerosene Oil (SKO) etc - Held that:- In terms of ISI Standards prescribed for HSD Oil, its sulphur content should not be more than 0.25%. Therefore, if the crude oil has higher sulphur content, as a result of which, the HSD oil obtained by refining of crude oil also has sulphur content much higher than that prescribed in the ISI specifications, the same would have to be removed. In course of de-sulphurisation process, the HSD Oil is reacted with hydrogen in presence of catalyst in course of which the sulphur present in the HSD reacts with hydrogen to form Hydrogen sulphide. The MDEA is used for dissolving the Hydrogen Sulphide gas so formed. Subsequently, the MDEA containing dissolved hydrogen sulphide is transferred to Amine recovery unit where the MDEA and hydrogen sulphide are separated. Since the Hydrogen sulphide, being a poisonous gas, can not be released in the atmosphere, in accordance with the Pollution Control norms, the same is required to be processed in Sulphur Recovery Unit where the sulphur is recovered from the Hydrogen Sulphide. Thus from the above process to which HSD is subject to for removal of sulphur, it is clear that role of MDEA is only in removal of sulphur. This chemical is not used in the Sulphur Recovery Unit. It is used only in the de-sulphurisation process which is necessary for manufacture of HSD confirming to the ISI standards which alone can be marketed. Therefore, the MDEA has to be treated as an input used in or in relation to the manufacture of HSD oil. It will be totally wrong to treat the MDEA as an input used, for manufacture of sulphur, as this chemical has no role to play in the recovery of sulphur from Hydrogen Sulphide in the Sulphur Recovery Unit. Impugned order denying the Cenvat credit in respect of this item is not sustainable - in favour of assessee.
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