1998 (7) TMI 275 - AT - Central Excise

Appeal granted for duty exemption on Potassium Metal used in heavy water manufacturing

The tribunal allowed the appeal filed by M/s. Heavy Water Board, confirming their eligibility for duty exemption under Notification No. 200/86 for ... Potassium Metal - Exemption Issues involved:- Interpretation of Notification No. 200/86 regarding the availability of benefits for Potassium Metal used in heavy water manufacturing.- Determination of ownership and operation responsibility of the Heavy Water Plant at Thal.- Assessment of whether the conditions specified in the notification were met for availing duty exemption.- Consideration of relevant agreements and government orders exempting Potassium Metal from duty.Interpretation of Notification No. 200/86:The appeal revolved around whether M/s. Heavy Water Board could benefit from Notification No. 200/86 for Potassium Metal used in heavy water production. The Collector imposed excise duty, contending that the metal was not exempt due to its use by a non-government entity. However, the appellant argued that the metal was sent to a government-owned plant for heavy water manufacture, making them eligible for the exemption.Ownership and Operation of Thal Plant:The ownership and operation responsibility of the Heavy Water Plant at Thal were crucial in determining eligibility for the duty exemption. The appellant presented evidence that the plant was owned by the Department of Atomic Energy (DAE) and operated by Rashtriya Chemicals & Fertilisers Ltd. (RCF) under an agreement. The agreement clearly stated DAE's ownership of the plant, indicating that despite RCF's operational role, the plant remained a department of the Central Government.Conditions for Duty Exemption:Notification No. 200/86 stipulated that duty exemption applied if goods were manufactured by government factories and intended for government department use. The tribunal observed that the Potassium Metal was indeed manufactured by a government factory. Despite its use by RCF, the plant's ownership by DAE established it as a government department, meeting the notification's conditions for duty exemption.Relevant Agreements and Government Orders:The tribunal considered the agreements and government orders exempting Potassium Metal from duty, emphasizing that the metal supplied to the Thal plant was eligible for exemption under various notifications and orders. The Central Government's exemptions further supported the appellant's claim for duty exemption, leading to the allowance of the appeal.In conclusion, the tribunal allowed the appeal filed by M/s. Heavy Water Board, confirming their eligibility for duty exemption under Notification No. 200/86 for Potassium Metal used in heavy water manufacturing at the Thal plant, owned by the Department of Atomic Energy. The judgment highlighted the importance of ownership and operational control in determining eligibility for duty exemptions under relevant notifications and government orders.