1990 (5) TMI 130 - AT - Central Excise

Exemption denied for ammonia used in melamine production post-urea manufacture.

The Tribunal upheld the decision of the Collector of Central Excise (Appeals), ruling that the ammonia used in the manufacture of molten urea for melamine ... Fertilizers - Exemption Issues:- Eligibility for exemption under Notification No. 145/71-C.E. for ammonia used in the manufacture of molten urea for the production of melamine.Detailed Analysis:The appeal in question was directed against an Order-in-appeal passed by the Collector of Central Excise (Appeals), Bombay, concerning the duty payment on ammonia removed without payment of duty. The appellants, engaged in manufacturing Anhydrous Ammonia for fertilizers, also used it in the production of molten urea and subsequently melamine, both attracting excise duty. The dispute revolved around the contention that the ammonia used in the manufacture of molten urea for melamine production was exempted under Notification No. 145/71-C.E. dated 26-7-1971, a claim rejected by the lower authorities, leading to the appeal.During the hearing, the main issue was whether the ammonia used in the production process was eligible for the exemption under the aforementioned notification. The revenue contended that a previous Tribunal decision in a similar case had ruled against the exemption for the appellants, citing similar facts and circumstances.The appellants argued that the ammonia used in the manufacture of molten urea was later regenerated and returned to ammonia storage, potentially leading to double duty payments if used for non-fertilizer purposes. They sought to distinguish the previous decision by highlighting the Collector's varying views for different periods and emphasizing the possibility of exemption if the regenerated ammonia was used for fertilizer production.Upon considering the submissions and records, the Tribunal referred to the earlier decision in the appellants' case, where it was held that the regenerated ammonia post-molten urea production was a new product attracting fresh excise duty, thus not eligible for the exemption. The Tribunal clarified that the observation regarding regenerated ammonia used for fertilizer production was not pertinent to the issue at hand, affirming that the ammonia used in the molten urea manufacturing process for melamine production did not qualify for the exemption under Notification No. 145/71-C.E.Consequently, the Tribunal upheld the impugned order, dismissing the appeal based on the findings and interpretations of the relevant legal provisions and precedents.