TMI Blog2009 (1) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal, New Delhi (for brevity 'the Tribunal') iii two appeals namely E.A. No. 3301/98 NB(B) and EA No. 639 of 2000 NB(B). The appellants have filed two appeals namely CEA Nos. 58 and 59 of 2004 which are proposed to be decided by this common order as common question of law has been raised in these appeals. The appellant has claimed that following substantive questions of law would emerge from the order of the Tribunal: "1. Whether the Tribunal was correct in law in holding that the benefit of Exemption Notification No. 8/96-CE dated 23-7-1996 as not available to the assessee as the Ammonia produced from Naphtha was not used for the manufacture of fertilizer; 2. Whether on the facts and circumstances of the case, penalty under Rule 173Q(1) of the Central Excise Rules, 1944 was exigible on the assessee?" 2. In order to put the controversy in its proper prospective few facts may first be noticed. The appellant is engaged in the manufacture of fertilizer using Naphtha as input. The raw material 'Naphtha' is subject to central excise duty. However, there is a notification bearing No. 8/96-CE, dated 23-7-1996 as amended by subsequent notification No. 4/97 dated 1-3-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the order reads thus: "We have considered the submissions of both the sides. It is not in dispute that the industrial products have been manufactured out of raw naphtha procured by availing the benefit of Notification. Once the Naphtha has been used in the manufacture of other products, the benefit of notification will not be available to the appellants. Accordingly, both the appeals are rejected." 5. The appellants filed another application under Section 35(C)(2) of the Act with a prayer for rectification of the mistake apparent on record of the order dated 29-9-2003 but the application was dismissed by stating that there was no mistake apparent on the face of the record. 6. Mr. Jagmohan Bansal, learned counsel for the appellant has vehemently argued that the event when the duly becomes payable in respect of Naphtha would complete itself when it is subjected to any process which result into production of another product. According to the learned counsel it is not possible to produce fertilizer or Ammonia Nitrate or Nitric Acid without first producing ammonia from Naphtha. He has mentioned that once the aforementioned process is not disputed then the moment ammon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter referred to as the said Table) and falling within the Chapter, heading No. or sub heading No. of the schedule to the Central Excise Tariff Act,1985 (5 of 1986), (hereinafter referred to as the said Schedule), specified in the corresponding entry in column (2) of the said table, from so much of the duty of excise leviable thereon which is specified in the said schedule, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said 'fable, subject to the conditions, if any, laid down in the corresponding entry in column (5) thereof or as mentioned in said column (5) and specified below the said table: Provided that the item No. 17 of the Conditions below, wherever applicable in this notification, shall come into effect on and from the 1st day of August, 1996 TABLE Reference Chapter Description of Rate Condition 27.1 27 Naphtha and Natural Gasoline Liquid for use in the manufacture fertilizer or ammona ....... Specified in item No. (3) and (4) of condition below Conditions: 3. The exemption shall be subject to proving to the satisfaction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al rate of duty was permitted subject to the condition mentioned in column (4) which provided that raw naphtha must be intended for use in the manufacture of fertilizers and ammonia. We are not concerned with the proviso to the said condition mentioned in column (4). Now a mere look at the said notification shows that when raw naphtha was utilised for manufacture of fertilisers and ammonia, it would earn the concessional rate of duty. It is not in dispute between the parties that raw naphtha which the appellant purchased from the open market was in fact utilised by it in manufacture of ammonia even leaving aside the further question as to whether it was utilised for manufacture of any fertiliser. It is, therefore, difficult to appreciate as to how CEGAT could persuade itself to hold that because ammonia manufactured out of raw naphtha had resulted in molten urea which was not a soil fertiliser, the benefit of the aforesaid notification could not be made available to the appellant which had utilised raw naphtha in its Plant. Moment it was shown that raw naphtha was wholly utilised by the appellant for manufacturing ammonia, the condition laid down in column (4) of the notification g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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