Concessional duty for raw naphtha used in ammonia production upheld despite later amendment to the exemption scheme.

Concessional duty was available for raw naphtha used in the manufacture of ammonia where the exemption notifications were read together. Notification No. 27/89 allowed concessional duty for raw naphtha used to produce synthesis gas, and Notification No. 40/85 exempted synthesis gas when used in ammonia manufacture. The later amendment to the exemption notification did not take away the benefit already arising under the exemption scheme, so the allowance of concessional treatment was upheld as being in accordance with law.

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Issues: Whether concessional rate of duty was available for raw naphtha used in the manufacture of ammonia, and whether the later amendment to the exemption notification operated prospectively only.

Analysis: Notification No. 27/89 provided concessional duty for raw naphtha used in the manufacture of synthesis gas. Notification No. 40/85 granted exemption to synthesis gas when used in the manufacture of ammonia. Reading the two notifications together, the later amendment did not defeat the benefit already available under the exemption scheme, and the order allowing the benefit was in accordance with law.

Conclusion: The concessional rate of duty was applicable, and the Revenue's challenge to the order failed.

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