TMI Blog1996 (7) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... of the exemption notification is, therefore, available to SAIL in regard to the raw naphtha that it utilised in its plant for the manufacture of fertiliser but which, for reasons over which it had no control, did not, in fact, result in the manufacture of fertiliser but had, at the interim stage of reformed gas, to be vented out. In the result, the appeals are allowed and the judgments and orders of the Tribunal under appeal are set aside. - 3406-11 of 1990 with 3178 of 1990 - - - Dated:- 30-7-1996 - S.P. Bharucha and K.T. Thomas, JJ. [Judgment per : Bharucha, J.]. - These are appeals against orders of the Customs, Excise Gold (Control) Appellate Tribunal dismissing appeals filed by the present appellants, Steel Authority of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own stream units of the plant. It was submitted that the two naphtha reforming plants have provisions in the system for automatic venting of gases, in the event gas formed cannot travel forward due to non-availability of power for operating the down stream plants, and excessive pressure build up. On many occasions gases are required to be vented out from the naphtha reforming plant when the said gases cannot be sent to down stream plants due to non-availability and low, interrupted and uncertain power supply or any other operational or maintenance problems in the plant. Moreover, the naphtha reforming plants have to be kept hot for preventing damages to the equipments, Reformer furnaces and catalysts in particular. Under the circumstances, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, been burnt in the naphtha reforming plant of SAIL for keeping it continuously running so that the ammonia plant could be switched on immediately upon resumption of power supply. The gas produced by burning the concerned raw naphtha did not reach the ammonia plant as the reformed gas was vented into the atmosphere. This quantity of raw naphtha could not, in the Tribunal's view, be said to have been used for the manufacture of fertiliser. The provisions of Rule 196 of the Central Excise Rules require that excise duty at full rate should be paid on demand in respect of such raw naphtha as was found not to have been actually used in the manufacture of fertiliser. The quantity of raw naphtha in dispute did not satisfy both the conditions p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had, in a circular, dated 22nd July, 1974, also made it clear to Excise Collectors that naphtha used during trial runs and commissioning of fertiliser plants was eligible for the excise duty concession. In the view of the Tribunal in the second order, the principle would apply. It said : "If venting out the reformed gas, produced out of the concessional rated naphtha was a technological necessity when the fertiliser plant itself could not be operated due to lack of adequate power supply - and, there is no dispute on this - we do not see why such use of naphtha cannot be termed to be use in the manufacture of fertiliser though no fertiliser was, in fact, produced. There is no allegation that this naphtha was misused or utilised in product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould be proved that the raw naphtha had been actually used in the manufacture of fertiliser. In the context, what was required to be shown was that the raw naphtha was used for the purpose and with the intention of manufacturing fertiliser. Duty at the full rate on the raw naphtha would be leviable only if it could not be shown to have been used for the purpose and with the intention of manufacturing fertiliser. 6.There can be no doubt that the raw naphtha that was fed by SAIL into its plant was for the purpose and with the intention of manufacturing fertiliser and that it was only because of supervening circumstances, namely, the low, uncertain and fluctuating availability of power, that the reformed gas produced during the interim stag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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