TMI Blog1991 (4) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 1-3-1984 was also issued prior to the issue of the above cited notification. By this Notification No. 75/84-C.E. raw naptha used in the manufacture of fertilizer was granted concessional rate of duty at Rs. 4.40 per kilo-litre at 150C Thermameter. The appellants have contended that in the process of manufacture of Melamine, Molten urea which is a chemical fertilizer is produced as an intermediate product which is in turn produced from ammonia. Ammonia is derived from raw naptha. The appellants claimed benefit of exemption under the said notification. Therefore, they filed a classification list claiming exemption in respect of quantities of Ammonia used in the manufacture of Molten urea which is ultimately consumed in the manufacture of the final product Melamine. They have also claimed concession under Notification No. 75/84-C.E. to the extent of Ammonia derived from raw naptha which is utilised for manufacture of Molten urea. 4. The Superintendent of Central Excise issued show cause notices demanding full rate of duty on the quantities of ammonia consumed by the appellants for the production of Molten urea for the various periods shown in the notices. The Department took the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that Molten urea does not specify the specification prescribed in the Fertilizer (Control) Order. Hence, it was to be classified under TI 68. He has also held that Chapter Notes 1 and 2 of Chapter 31 have been used in the sense of soil fertilizer. Therefore, Molten urea not being used as soil fertilizer for which the notification is intended, the claim of the benefit under the said notifications would not be available to the appellants. 7. Appeal No. 2010/89-C arises from the impugned order-in-appeal dated 17-4-1989 which arose from order-in-original dated 12-11-1986 pertaining to the period February, 1986 to March, 1986. The issue was with regard to the availability of concession from payment of duty in respect of Ammonia used in the manufacture of Molten urea under Notification No. 40/85-C.E., dated 17-3-1985. The appellants had also claimed benefit of Notification No. 217/86-C.E., dated 2-4-1986. The learned Collector rejected the claim under Notification No. 217/86 dated 2-4-1986 as this was not raised before the Assistant Collector. The learned Collector held that Molten urea was being used in the manufacture of Melamine which was not a fertilizer and, therefore, he re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal dated 1-3-1989. The issue is same as in appeals No. 2052-2053/89-C. 12. The appellants have given the process of manufacture of Melamine in their appeal Memo which is reproduced below :- (I) The Melamine plant is based on Chemie-line process. In this process, Molten urea from Urea plant is injected in Urea compressor over a fluidised bed. The heat required for the decomposition of urea is supplied from Molten Salt system. The urea is decomposed into a gaseous mixture of isocyanic acid and ammonia. The mixture is then passed over a catalyst bed where isocyanic acid is converted into Melamine. The Melamine vapour alongwith gaseous ammonia and carbondioxide escapes converter at reaction temperature and is at once quenched in a scrubber by direct aqueous solution where melamine in aqueous solution is formed. (II) The Melamine suspension is filtered in rotary pressure filter. The humid Melamine collected on rotary filter is dried in a dryer. Agglomeration if any, are ground in a pin disk mill and the product is bagged. The off-gas containing ammonia and carbondioxide is absorbed in ammonia carbonate towers where entire carbondioxide and portion of ammonia are absorbed in cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot a fertilizer. In any event of the matter, he contended that as long as the product was being classified as a fertilizer, the benefit of the notification for fertilizer, cannot be denied to them. In this connection, he relied upon the rulings mentioned below :- Hemraj Gordhandas v. H. H. Dave, Asstt. Collector of Central Excise Customs, Surat Others [1978 E.L.T. J-350] Basf India Ltd. v. Collector of Central Excise [1989 (40) E.L.T. 363 (Tribunal)] Collector of Central Excise, Cochin v. Fertilizers and Chemicals Tranvancore Ltd. [1986 (24) E.L.T. 388 (Tribunal)] S. K. F. v. Collector of Central Excise [1990 (49) E.L.T. 649]. 16. Shri L. N. Murthy, learned DR contended that only those urea which are fertilizer and falling under Chapter 31 are excluded from Chapter 29 as evident from Note 2(e) of Chapter 29. Urea has several uses as can be seen from the definition and uses of urea appearing at page 1073 of Condensed Chemical Dictionary, 10th Edition which is reproduced below - Urea (Carbamide) CO (NH2)2. Occurs in urine and other body fluids. The first organic compound to be synthesized (Wobler 1824) 14th highest volume chemical produced in US (1979) (as primary so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore us. As has been rightly contended by the learned DR, Chapter Notes 1 and 2 of Chapter 31 covers Mineral or Chemical fertilizer which are excluded from Chapter 29 by virtue of Note 2(e) of Chapter 29. The learned DR has also shown to us from the extracts of Chemical Dictionary regarding the uses of Urea which are noted above. The Urea has got various uses and only such urea which are used and understood as mineral or chemical fertilizer, are classifiable under Chapter 31. In the present case, Molten urea is being utilised for manufacture of Melamine which is not a fertilizer at all. Therefore, it follows that Ammonia which is extracted from raw naptha for the manufacture of Molten urea, is ultimately not being utilised for the manufacture of fertilizers. The benefit of the notification would be available only if the ammonia is utilised for ultimate manufacture of fertilizer. The various products which may arise may not be important so long as the process is continuous and the final product which emerges is a fertilizer. 18. From this point of view, the non-applicability of the notifications in question to the ammonia which has gone into the manufacture of products other than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .L.T. 542]. The Tribunal has rejected the appellants claim for exemption from whole of duty of excise on ammonia if it is used in the manufacture of fertilizer falling under Tariff Item 14-HH. In this ruling, the Tribunal noted its earlier ruling rendered in the appellants own case as reported in [1990 (47) E.L.T. 76]. The findings of the Tribunal in para 6-A and 7 of the citation as reported in [1990 (50) E.L.T. 542] is noted below - We have considered the rival submissions and perused the records. The Notification No. 145/71-C.E., dated 26-7-1971 exempts whole of duty of excise on ammonia if it is used in the manufacture of fertilizers falling under Tariff Item 14-HH. We are fully convinced that the issue is covered by the earlier decision of the Tribunal in the appellants case cited supra. The relevant finding portion in the said decision is reproduced as under - We are unable to accept the argument of the learned counsel for the appellant that the ammonia used in the manufacture of molten urea is again generated at a subsequent stage. The ammonia that is used in the manufacture of molten urea is consumed entirely in its manufacture and by virtue of splitting up of residua ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
