Exemption for synthesis gas supplied to a heavy water plant was upheld where procedural conditions and Chapter X compliance were satisfied.

Synthesis gas supplied by the specified manufacturing unit to the corresponding heavy water plant qualified for exemption under Notification No. 415/86-C.E. where the gas was used for manufacture, testing or commissioning and later returned for use in fertiliser manufacture. The apparent shortfall between quantity supplied and quantity returned was treated as consumption in the heavy water extraction process, not as a disqualifying loss. On the admitted facts, both units fell within the notification, the gas was used for heavy water manufacture, and no non-compliance with Chapter X procedure or the proper officer's satisfaction was established, so the exemption was correctly availed.

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Issues: Whether synthesis gas supplied to a specified heavy water plant was entitled to exemption under Notification No. 415/86-C.E. dated 15-5-1986, and whether the conditions of the notification, including Chapter X procedure, stood satisfied.

Analysis: The notification granted benefit where synthesis gas was supplied by the specified manufacturing unit to the corresponding heavy water plant for manufacture and testing or commissioning, and where the gas was returned and used in the manufacture of fertiliser, subject also to observance of Chapter X procedure and satisfaction of the proper officer. The difference between the quantity supplied and the quantity returned was found to represent consumption in the heavy water plant during the extraction process, not a disqualifying loss. On the admitted facts, both units were covered by the notification, the gas had been used for manufacture of heavy water, and nothing established non-compliance with the procedural requirements.

Conclusion: The benefit of the notification was correctly availed, and the department's challenge failed.

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