Naphtha exemption for fertiliser manufacture allowed where fuel made from it was used in the fertiliser production chain.

Naphtha used to manufacture fuel, where that fuel was in turn used in manufacturing fertiliser, satisfied the end-use condition in the exemption entries for Naphtha and Natural Gasoline Liquid for use in the manufacture of fertiliser or ammonia. The Tribunal treated the actual downstream use as sufficient, noted that the assessee had earlier obtained the same exemption on a similar notification, and held that the notification condition was met. Exemption under the relevant serial numbers in Notification No. 6/2000-C.E. and Notification No. 3/2001-C.E. was therefore available.

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Issues: Whether Naphtha used in the manufacture of fuel, which in turn was used in the manufacture of fertiliser, was eligible for exemption under Serial No. 14 of the table annexed to Notification No. 6/2000-C.E. and Serial No. 22 of the table annexed to Notification No. 3/2001-C.E.

Analysis: The relevant entries covered Naphtha and Natural Gasoline Liquid for use in the manufacture of fertiliser or ammonia. It was undisputed that the fuel made from Naphtha was itself used in the manufacture of fertiliser. The same assessee had earlier been held entitled to exemption on the same kind of Naphtha under a similar notification, and the Tribunal accepted that the end-use satisfied the notification condition.

Conclusion: The Naphtha was covered by the relevant serial numbers in the exemption notifications and the benefit of exemption was available to the assessee.

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