TaxTMI 
TaxTMI 
1996 (7) TMI 147
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....uses raw naphtha. Raw naphtha was, at the relevant time, excisable at a concessional rate of duty in terms of an exemption Notification (No. 187 of 1961), dated 23rd December, 1961, as amended from time to time. The concessional rate of duty stated therein was admissible provided - "(i) it is proved to the satisfaction of an officer not below the rank of an Assistant Collector of Central Excise that such raw naphtha is intended for use in the manufacture of fertiliser; and (ii) the procedure set out in Chapter X of the Central Excise Rules, 1944 is followed." It was the case of the Revenue that a substantial quantity of raw naphtha was not, in fact, used by SAIL in the manufacture of fertiliser. SAIL was, therefore, served with sho....
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....safety of the equipments and life of refractory furnaces and catalysts of the plant, naphtha had to be consumed on those days, when there was no production of Ammonia. Naphtha consumed for the gases vented out during those days when there was no production of Ammonia, was essential for keeping the naphtha reforming plant in operational fitness and safe condition so that the plant could be lined up for production of Ammonia and fertiliser at any time in the subsequent period depending on power availability." 2.The matter first came before the Tribunal in relation to an order passed by the Collector of Central Excise (Appeals), Calcutta, on 17th September, 1987. The Tribunal then placed reliance upon Rule 196(1) of the Central Excise Rules....
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.... it. The order of the Collector, dated 17th September, 1967, was, therefore, upheld. 3.In the second order of the Tribunal, which arose upon an order passed by the Collector on 22nd September, 1989, the earlier order aforementioned was followed; but it was followed only because, as expressly stated, judicial propriety and discipline so required. The view expressed by the Tribunal in the second order was contrary to that expressed in the first order. The second order noted that there was no dispute that the raw naphtha, when it was procured by SAIL, was intended for use in the manufacture of fertiliser but, for operational reasons, it became necessary for SAIL to vent out the reformed gas produced out of the raw naphtha concerned before i....
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....preted in a liberal spirit, looking to the object of the notification viz., reducing the cost of inputs for fertilisers, as indeed the Tribunal did when it held that use of naphtha is pre-commission trials, not resulting in production of fertiliser would be eligible for the benefit of the relevant notifications." 4.In our opinion, the Tribunal was right when it expressed its dis-agreement in the second order with the view taken in the first order. 5.It is important to note that the exemption notification required proof that the raw naphtha was "intended for use" in the manufacture of fertiliser and not that the raw naphtha was used in the manufacture of fertiliser. Due emphasis has to be given to the clear language of the first condit....