TaxTMI 
TaxTMI 
2008 (11) TMI 6
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....ethane and ethane automatically emerge as by-products and is an inevitable consequence of cracking of raw naphtha. Methane and the ethane fall under chapter 27 of the Tariff Act. 4. It is the common case of the parties that a part of the ethylene and propylene manufactured by the aforesaid process is captively consumed by using the same as a refrigerant in the process of separation and to provide external treatment to keep some of the products at low-temperature to prevent their polymerization. The remaining quantity of ethylene and propylene is sold as the final product. 5. The case of the appellant as set out in appeal is as follows: The respondent assessee holds Central Excise Registration for manufacture of excisable goods falling under chapter Nos. 27, 28, 29, 32, 38, 39 and 40 of the Schedule to the Tariff Act. 6. The respondent manufactures petro chemicals falling under chapters 27 and 29 from raw naptha. Raw Naptha is cracked in cracker containing number of burners and heated upto 800 degree centigrade. After the process of cracking, Ethylene and Propylene gases are produced in the factory. These gases are also captively consumed as a refrigerant for cooling since ....
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.... by the Tribunal, the Revenue is in appeal before this Court. 14. According to the appellant, the assessee is not entitled to get the benefit of the exemption notification if the inputs manufactured in the factory are captively used for the manufacture of final products not specified in column 3 of the Table annexed to the notification. Chapter heading 27 is not available in column 3 of the Table. The methane and ethane, the finished products manufactured by using ethylene and propylene as refrigerant fall under chapter 27. Hence, as per the notification the ethylene and propylene (inputs) used for the manufacture of goods falling under chapter 27 are not entitled to get exemption from duty as per the notification. 15. In the order in original there is specific finding that ethylene and propylene are used in the manufacture of goods falling under chapter 27. 16. It was contended by the respondent that ethylene and propylene were used as refrigerant to cool hydrocarbon gases, which result from the cracking of naphtha. It is as a result of this cracking that ethylene, propylene along with ethane, methane and other substances emerge. The emergence of ethane and methane ....
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....case, the Court held that in order to claim benefit of a notification, a party must strictly comply with the terms of the notification. If on wording of the notification the benefit is not available then by stretching the words of the notification or by adding words to the notification benefit cannot be conferred. 22. Reliance was also placed on the case of Commissioner of Central Excise, Trichy v. Rukmani Pakkwell Traders (2004) 11 SCC 801. The same principle has been reiterated in this case and the court held that exemption notifications have to be strictly construed. They must be interpreted on their own wording. To be entitled to the benefits of a notification, a person has to strictly comply with the conditions of that notification. If on a plain reading of the notification the benefit is not available then merely on the basis of principles applied in infringement cases benefit cannot be claimed. 23. Mr. D.B. Shroff, learned senior counsel appearing for the respondent submitted that he is not questioning the well- settled proposition of law, but the respondent assessee in this case is entitled to the benefits of the notification on a plain reading of the notification. ....
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.... totally exempt from payment of excise duty under the second exemption notification." 27. In National Organic Chemical Industries Ltd. V. Collector of Central Excise, Bombay 1997 (89) ELT 643, this Court observed as under: "11. Crude petroleum is refined to produce raw naphtha. Raw naphtha is further refined, or cracked, to produce the said products. This is not controverted. It seems to us to make no difference that the appellants buy the raw naphtha from others. The question is to be judged regardless of this, and the question is whether the intervention of the raw naphtha would justify the finding that the said products are not "derived from refining of crude petroleum". The refining of crude petroleum produces various products at different stages. Raw naphtha is one such state. The further refining, or cracking, of raw naphtha results in the said products. The source of the said products is crude petroleum. The said products must, therefore, be held to have been derived from crude petroleum." 28. In Doypack Systems (Pvt.) Ltd. v. Union of India 1988 (36) ELT 201, this Court had an occasion to examine the expressions "pertaining to", "in relation to" and "arising ....