M.S.SHAH, J. - (1.) RULE .
(2.) HEARD Mr. Praesh M. Dave, learned Counsel for the petitioners and Mr. D.N. Patel, learned Senior Central Government Standing Counsel for the respondents on the question of interim relief. Mr. Dave for the petitioners has submitted as under : - 3.1 The petitioner -Company is making Ammonium Nitrate by prilling (evaporating) Ammonium Nitrate Melt. The prilling process only involves removal of impurities from Ammonium Nitrate Melt and, therefore, there is no manufacturing. 3.2 By Circular No. 44/89, dated 19 -7 -1989 (Annexure 'B' to the petition), the Central Board of Excise and Customs directed all the authorities under the Excise Act that no excise duty can be lawfully charged or be required to be paid on Prilled Ammonium Nitrate as is obtained from 'ammonium nitrate melt' since excise duty is chargeable only on manufacture of excisable goods. The said circular still holds the field. 3.3 Notwithstanding the decision of the Larger Bench of CEGAT in Supreme Chemical Works v. Collector of Central Excise, Jaipur - 2000 (119) E.L.T. 707, the Central Board has not withdrawn the above numbered Circular dated 19 -7 -1989 and, therefore, the department is bound by the said circular, as held by the Apex Court in Ranadey Micronutrients v. Collector of Central Excise, 1996 (87) E.L.T. 19 and in Paper Products Ltd. v. Commissioner of Central Excise, 1999 (1.12) E.L.T. 765. 3.4 The decision of CEGAT in Supreme Chemical Works (supra) is not applicable to the Prilled Ammonium Nitrate because the decision in Supreme Chemical Works was in respect of Ammonium Nitrate flakes manufactured from Ammonium Nitrate melt. Prilled Ammonium Nitrate and Ammonium Nitrate flakes are two different products and, therefore, the Deputy Commissioner has erred in invoking the CEGAT decision in Supreme Chemical Works. 3.5 In the Supreme Chemical Work (supra), the Tribunal was not concerned with the prilling process and it was only concerned with manufacturing of Ammonium Nitrate flakes. Therefore, the observations made by the Tribunal in Supreme Chemical Works' case holding the decision in Anil Chemical Pvt. Ltd. -1985 (21) E.L.T. 889 (T) as incorrect, cannot be accepted as a considered statement of law Anil Chemicals Pvt. Ltd. - 1985 (21) E.L.T 889 (T) and IDL Chemicals Ltd. -1993 (68) E.L.T. 589 (T) were two different cases dealing with two different products and, therefore, the Tribunal was not justified in holding that Anil Chemicals Pvt. Ltd. was not correctly decided. 3.6 Mr. Dave has also referred to the declaration filed by the petitioners on 16 -1 -2003 which was long prior to the date of search and seizure in June, 2003 and in particular our attention is invited to Paragraphs 8 and 9 of the declaration. In Para 8(a) of the said declaration, the petitioners had stated that the product is not excisable in terms of CBEC Circular No. 44/89, issued on 19 -7 -1989. In Para 8(b), the petitioners had indicated the ground of exemption under the said circular and also pointed out the stand taken by the department in the past that conversion of Ammonium Nitrate Melt into Prilled Ammonium Nitrate does not amount to manufacture and no new product comes into existence.
(3.) ON the other hand, Mr. D.N. Patel, learned Senior Standing Counsel for the Central Government has submitted that when the Larger Bench of CEGAT has already held in Supreme Chemical Works' case that the statement of law in Anil Chemicals' case must be held to be incorrect, the view taken by the respondent -officers cannot be said to be illegal or arbitrary. Mr. Patel has further referred to the reply affidavit of Mr. Haresh T Bhatia, Assistant Commissioner of Central Excise & Customs, Vapi Division stating that Circular No. 44/99, dated 19 -7 -1989 of the CBEC was issued on the basis of the decision of the Tribunal in Anil Chemicals' case and, therefore, once the very foundation of the circular has been knocked down by the decision of the Larger Bench of the Tribunal in Supreme Chemicals Works' case, the respondents are justified in initiating proceedings against the petitioners for recovery of excise duty on the basis that prilling amounts to manufacturing. Mr. Patel has further submitted that when the Tribunal has held that the decision in Anil Chemicals' case was not correct, but the decision in IDL Chemicals' case was not correct, it means that the manufacturing process is the same in both the cases. Hence, the judgment of the Larger Bench of CEGAT is applicable in the instant case. Mr. Patel has also relied on Circular No. 23/98, dated 27 -74998 from the Directorate General of Anti -Evasion (Central Excise) in support of his contention that prilling Ammonium Nitrate involves manufacturing process.;