Lean gas classification turned on manufacture and marketability, with the product treated as distinct from natural gas.

Lean gas was treated as a commercially distinct excisable product because it was movable and marketable, and its composition, name, character and use differed from natural or associated gas. The Tribunal held that common use as fuel did not make the two gases identical, and that the extraction process produced a separate manufactured product rather than a mere residue or waste. On that basis, lean gas was classified under Tariff Item 68, and the classification under Tariff Item 11AA(2) was set aside. The decision also recognised eligibility to any lawfully available exemption notification applicable to the product.

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Issues: Whether Lean Gas was excisable goods manufactured from natural or associated gas and, if so, whether it was correctly classifiable under Tariff Item 68.

Analysis: Lean Gas was held to be movable and marketable goods. On the materials placed before the Tribunal, its composition, name, character and use were found to be different from natural or associated gas. The Tribunal held that mere use as fuel did not make the two identical and that the gas supplied under the agreements had distinct specifications and uses. The process by which LPG was extracted from natural gas resulted in a commercially distinct product, and the cited authority on waste and scrap did not apply because Lean Gas was not a mere refuse or inferior residue without independent identity.

Conclusion: Lean Gas was held to be the result of manufacture and was classifiable under Tariff Item 68, with eligibility to any lawfully available exemption notification. The classification under Tariff Item 11AA(2) was set aside, and the appeal succeeded only to that extent in favour of the assessee.

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