S.B. Majmudar, J. - (1.) These six appeals are preferred by the common appellant, M/s. Gujarat State Fertilisers Company, against the central excise authorities, being aggreived by common judgment and order D/- 19-4-1991 rendered by the Customs and Gold (Control) Appellate Tribunal (CEGAT for short). The appellant contends that it is entitled to concessional rate of excise duty on raw naphtha consumed by it at its factory at Vadodara for manufacturing ammonia which was captively consumed for manufacturing molten urea. That claim for concessional rate of duty is based on Notification No. 75 of 1984 D/- 1-3-1984, as amended from time to time, issued by the Central Government in exercise of its powers conferred by sub-rule (1) of Rule 8 of the Central Excise Ruels, 1944 promulgated under the Central Excises and Salt Act, 1944. The appellant also claimed total exemption from excise duty on the manufactured ammonia utiliesed by it for production of molten urea by captively consuming the aforesaid ammonia manufactured out of raw naphtha. The said claim is based on a similar exemption notification issued by the Central Government being Notification No. 40 of 1985 dated 17-3-1985, as amended from time to time. The aforesaid manufactured molten urea was further captively consumed for manufacturing melamine. This claim based on the aforesaid exemption notification was sought to be negatived by issuance of six show cause notices by the excise authorities on the ground that the aforesaid exemption notifications were not applicable to raw naphtha utilised for manufacturing ammonia as well as to ammonia captively consumed for manufacturing molten urea on the ground that the ultimate product manufactured out of it was melamine which was not a fertiliser. It was also contended by the excise authorities that molten urea which was manufactured out of ammonia was not by itself a soil fertiliser and, therefore, on the express terms of the exemption notifications, the appellant was not entitled to get the benefit of concessional rate of excise duty on raw naphtha utilised by it for manufacture of ammonia as well as of total exemption from excise duty on ammonia which was utilised in the manufacture of molten urea. The aforesaid show cause notices were issued by the Superintendent of Central Excise, Vadodara, to the appellant on various dates between 12-5-1986 and 28-5-1987. The appellant was called upon to show cause as to why duty should not be recovered at full rate on the quantity of raw naphtha and ammonia utilised by the appellant for production of molten urea during the period in question and as to why concessional rate of duty on raw naphtha under Notification No. 75 of 1984 and exemption to ammonia under Notification No. 40 of 1985 should not be disallowed.
(2.) The appellant by its replies to these show cause notices contended that as a public limited company, it was engaged in the manufacture of fertilisers, ammonia and chemicals. That one of the raw materials used for the manufacture of ammonia was raw naphtha which was purchased by the appellant. That ammonia manufactured by it which falls under Chapter 28 of the Schedule to the Central Excise Tariff Act, 1985 (Tariff Act for short) was captively consumed by it in its Urea Plant for manufacture of molten urea. It was submitted by the appellant that molten urea was classified by the excise authorities under Chapter 31, which refers to fertilisers and duty was paid on molten urea as a chemical fertiliser under Heading 31.02 which covers nitrogenous mineral and chemical fertiliser. The molten urea was then captively consumed in its Melamine Plant for the manufacture of melamine which was not a fertiliser. The case of the appellant was that though molten urea was not used for manufacture of fertiliser, it still remained classifiable as a fertiliser, regardless of its use. Relevant chapter notes were relied upon by the appellant in this connection.
(3.) The Assistant Collector of Central Excise after considering the appellants case came to the conclusion that raw naphtha was utilised by the appellant in manufacturing ammonia which in its turn was utilised for manufacturing molten urea and that as molten urea was a chemical fertiliser, the benefit of both the aforesaid notifications was available to the appellant. Consequently, the show cause notices were discharged by six orders passed by the Assistant Collector between 12-11-1986 and February 1989.;