Retrospective exemption absent, pre-notification duty liability survives on NGL/ARN used for steam generation in heavy water production.

Duty on NGL/ARN used to generate steam for production of heavy water remained payable because the relevant exemption under Notification No. 23/2004 was introduced later and was not retrospective; past clearances could not be covered by that notification, so the duty demand and interest were upheld. Duty on treated water and de-mineralized water sold to another unit was not sustainable on the facts, so the assessee succeeded on that part of the demand. The demand survived only in relation to NGL/ARN.

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Issues: (i) Whether duty was payable on NGL/ARN used for generation of steam supplied for production of heavy water at the outside plant; and (ii) whether duty could be demanded on treated water and de-mineralized water sold to the other unit.

Issue (i): Whether duty was payable on NGL/ARN used for generation of steam supplied for production of heavy water at the outside plant.

Analysis: The exemption for the relevant goods became available only under Notification No. 23/2004, and no retrospective effect was granted to cover the period prior to its issue. The material was used before the notification came into force, and the benefit could not be extended for past clearances on that basis.

Conclusion: The duty demand on NGL/ARN was upheld, along with applicable interest, against the assessee.

Issue (ii): Whether duty could be demanded on treated water and de-mineralized water sold to the other unit.

Analysis: The appeal was accepted on the remaining items, indicating that the duty demand on treated water and de-mineralized water was not sustainable in the facts of the case.

Conclusion: The assessee succeeded on the demand relating to treated water and de-mineralized water.

Final Conclusion: The demand survived only in respect of NGL/ARN, while the assessee obtained relief on the other disputed items.

Ratio Decidendi: A subsequent exemption notification, without retrospective operation, cannot extinguish duty liability for clearances made before its commencement.

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