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2009 (3) TMI 350 - AT - Central ExciseAllegations that the respondents had wrongly availed exemption under C.B.E. & C. Board Circular No. 246/80/96-CX, dated 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. – 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 ammonia in question was, in fact, vented out or not, as ammonia in vapour form cannot be flared by ignition, is an altogether new plea, which was not the subject matter of the show cause notice. The Revenue, therefore, cannot traverse beyond the show cause notice. – no clandestine removal proved – appeal dismissed
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