Ammonia exemption denied where input was consumed in molten urea manufacture for melamine production, with demand sustained.

Ammonia removed to a melamine plant for use in making molten urea for melamine production was held not to qualify for exemption under Notification No. 145/71-C.E. The exemption covered ammonia used in the manufacture of fertilizers under Tariff Item 14HH, but the Tribunal held that ammonia consumed in the molten urea process was not used for that exempt purpose. It further held that any ammonia re-emerging after decomposition was a regenerated, new product attracting fresh excise duty, and the later observation about regenerated ammonia returned to storage for fertilizer use was irrelevant to this issue. The demand was sustained.

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Issues: Whether ammonia removed to the melamine plant for use in the manufacture of molten urea for production of melamine was eligible for exemption under Notification No. 145/71-C.E. dated 26-7-1971.

Analysis: The exemption under Notification No. 145/71-C.E. applies to ammonia used in the manufacture of fertilizers falling under Tariff Item 14HH. The Tribunal followed its earlier decision in the same assessee's case and held that ammonia used in the manufacture of molten urea is consumed in that process and the ammonia that re-emerges after decomposition is a regenerated, new product attracting fresh excise duty. The subsequent observation regarding regenerated ammonia returned to storage and used for fertilizers was held to be irrelevant to the present issue.

Conclusion: The ammonia removed to the melamine plant for use in the manufacture of molten urea for production of melamine was not eligible for exemption under Notification No. 145/71-C.E., and the demand was sustained.

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