Refinery gas and excisability: internal use for heat generation does not change its non-manufactured character.

Refinery gas generated in a factory and partly flared or internally used for heat generation was treated as not becoming a manufactured and excisable product merely because it produced fuel economy. The Board's circular recorded that refinery gas had earlier been exempted and that departmental authorities had taken the view that it was not a manufactured product; that circular was stated to be binding on the department. On that basis, the demand for duty was considered unsustainable.

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Issues: Whether refinery gas generated in the factory, partly flared and partly used internally for heat generation, was a manufactured and excisable product so as to attract duty.

Analysis: The Circular of the Board stated that refinery gas had earlier been exempted and that the Department had taken the view that such gas could not be regarded as a manufactured product. The internal use of a part of the gas for generating heat did not alter its character or make it dutiable merely because it yielded fuel economy. The Board circular was binding on departmental authorities, and the same issue had already been decided consistently in favour of the view that refinery gas was not manufactured product.

Conclusion: The demand of duty was unsustainable and the appeal was allowed.

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