Plain-language reading of exemption notifications governs concessional duty for raw naphtha and ammonia used in chemical fertiliser production.

Exemption notifications must be construed by their plain language, without importing a narrower limitation not found in the text. Raw naphtha used in manufacturing ammonia and molten urea qualified for the concessional excise duty benefit under Notification No. 75 of 1984 because the notification covered use in fertiliser production, and molten urea was a chemical fertiliser under Chapter 31. The benefit could not be denied merely because the molten urea was later used to make melamine. On the same reasoning, ammonia captively consumed to manufacture molten urea remained within Notification No. 40 of 1985, since the notification covered ammonia used in making fertilisers and did not confine fertiliser to soil fertiliser. The duty demands could not survive.

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Issues: (i) Whether Notification No. 75 of 1984 granted concessional excise duty on raw naphtha used in manufacturing ammonia and molten urea; (ii) Whether Notification No. 40 of 1985 exempted ammonia captively consumed for manufacture of molten urea when molten urea was a chemical fertiliser but was further used to make melamine.

Issue (i): Whether Notification No. 75 of 1984 granted concessional excise duty on raw naphtha used in manufacturing ammonia and molten urea.

Analysis: The notification required raw naphtha to be intended for use in the manufacture of fertilisers and ammonia. Raw naphtha purchased by the assessee was in fact used in the manufacture of ammonia, and the notification did not impose a further restriction that the fertiliser must be only a soil fertiliser. The Court also noted that molten urea was a chemical fertiliser within Chapter 31 of the Tariff Act. The department's denial based on the ultimate use of the product in melamine was inconsistent with the plain wording of the notification.

Conclusion: The benefit of Notification No. 75 of 1984 was available to the assessee.

Issue (ii): Whether Notification No. 40 of 1985 exempted ammonia captively consumed for manufacture of molten urea when molten urea was a chemical fertiliser but was further used to make melamine.

Analysis: The exemption depended on the express condition that ammonia be used in the manufacture of fertilisers. Chapter 31 of the Tariff Act covered mineral or chemical fertilisers, including urea, even when not used as fertilisers. Molten urea was treated by the excise authorities as a chemical fertiliser under Heading 31.02, and the chapter notes formed part of the interpretive framework of the notification. The Court held that the department could not read into the notification a limitation confining fertiliser to soil fertiliser or deny exemption because molten urea was later used to manufacture melamine. The plain language of the notification governed.

Conclusion: The benefit of Notification No. 40 of 1985 was available to the assessee.

Final Conclusion: The duty demands founded on the show cause notices could not survive, and the assessee was entitled to the concessional and exempt treatment claimed on raw naphtha and ammonia.

Ratio Decidendi: Exemption notifications must be construed according to their plain language, and where the notification expressly covers fertilisers under a tariff chapter that includes chemical fertilisers, the benefit cannot be denied by importing a narrower object or by limiting fertiliser to soil fertiliser only.

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