1989 (3) TMI 231 - AT - Central Excise

Tribunal Upheld Decision on Excise Rule Interpretation: Exemption Denied for Catalysts

RASHTRIYA CHEMICALS & FERTILIZERS LTD. Versus COLLECTOR OF C. EX.

The Tribunal upheld the decision of the lower authorities, dismissing the appeal regarding the interpretation of Rule 56-C of the Central Excise Rules, ... Primary manufacturer Issues:1. Interpretation of Rule 56-C of Central Excise Rules, 1944 regarding the use of platinum/rhodium gauges as catalysts.2. Claim for benefit under Notification No. 118/75-C.E. for exemption from excise duty.Analysis:1. The appellants sought permission under Rule 56-C to send platinum/rhodium to a secondary manufacturer for refining into gauges used as catalysts in nitric acid production. The lower authorities rejected the claim that catalysts could be considered raw materials under Rule 56-C.2. The appellants then claimed exemption under Notification No. 118/75-C.E. for goods intended for use in the factory where they were manufactured or in another factory of the same manufacturer. This claim was also denied as the gauges were not manufactured by the appellants in their own factory.3. The appellants argued that as primary manufacturers under Rule 56-C, they should be entitled to benefits under other notifications, including No. 118/75. They contended that the term 'manufacturer' in the notification should encompass primary manufacturers under Rule 56-C.4. The department contended that the factory of the secondary manufacturer could not be considered the appellants' factory for the purpose of Notification No. 118/75. They argued for a strict interpretation of the notification's wording, citing legal precedent.5. The Tribunal noted that the appellants were recognized as primary manufacturers under Rule 56-C, allowing them to move raw materials to a secondary manufacturer and receive finished goods without duty payment. However, catalysts were not considered raw materials under the rule.6. The Tribunal held that catalysts do not qualify as raw materials under Rule 56-C as they do not react in the production process. The claim for Notification No. 118/75 benefits was also rejected as the gauges were not manufactured in the appellants' factory.7. The Tribunal emphasized that the factory of the secondary manufacturer could not be deemed the same as the appellants' factory for the notification's purposes. The definition of 'factory' under the law did not support the appellants' claim for exemption under Notification No. 118/75.8. Consequently, the Tribunal upheld the lower authorities' decision and dismissed the appeal, finding no grounds for interference with the Collector of Central Excise (Appeals) order.