LexM/S INDIAN PETROCHEMICALS CORPORATION LTD. versus COLLECTOR OF CENTRAL EXCISE, VADODARA
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
A
M/S INDIAN PETROCHEMICALS CORPORATION LTD.
B
.c
D
v.
COLLECTOR OF CENTRAL EXCISE, VADODARA
MARCH 5, 1997
[A.M. AHMADI, en. AND SU.TATA v. MANOHAR, J.]
Central Excise Tariff Act 1985-{}zaptm 27 and 29-Raw Naptha-Ex-
empted from duty-By notification for manufacturing products enumerated in
table subjected to Thennal cracking by-product Pyrolysis Gasolene-Collector
levied excise duty--T1ibunal held that pyrolysis Gasolcne used for manufac-
ture of Petroleum Resins not entitled for exemption-Held, raw naptha not
diverted to manufacture Petroleum Resins-Pyrolysis Gasolene intennediate
product-Totaliy exempted from payment of excise duty-Order of Tribunal
set aside.
The appellant was engaged in the manufacture of Ethylene,
Prophylene, Benzene, Toluene and other products falling under chapters
27 and 29 of the Central Excise Tariff Act, 1985. The raw naphtha obtained
by the appellant under the notification was exempted from payment of duty
for manufacturing products specified in the table. The raw naphtha was
E
subjected to thermal cracking and one of the by products obtained was
pyrolysis gasolene. The Collector of Central Excise held that the entire
quantity of pyrolysis gasoline was not entitled to concessional rate of duty
as it was used for the manufacture of Petroleum. Resins which were not
enumerated in the said table.
F
G
On appeal, the Tribunal held that Pyrolysis Gasolene used for
manufacture of Benzene and Toluene was entitled to concessional rate of
duty but p)Tolysis Gasoline used for manufacture of Petroleum Resins was
not entitled to concessional rate. Hence the present appeal.
The contention of the appellant was that the entire quantity of raw
naphtha obtained was subjected to fraction and other process to manufac-
ture the products. One of the by products obtained was Pyrolysis Gasolene
which was further processed to obtain Benzene and Toluene which were
products mentioned in the table. According to the appellant there was no
H violation of the terms of the notification.
718
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INDIAN PETROCHEMICALS v. COLLECTOR OF CENTRAL EXCISE
719
On the other hand the respondent c11ntended that the appellant had A
diverted raw naphth~ to the manufacture of petroleum Resin and there-
fore, not entitled to concessional rates of excise duty.
Allowing the appeal, this Court
HELD : 1.1. The contention of the Collector of Central Excise that B
the appellant has diverted raw naphtha· to the manufacture of Petroleum
Resins is not correct. What the appeHant obtained under the exemption
notification was raw naphtha which was subjected to thermal cracking. The
entire quality of raw naphtha was subjected to processing for the purpose
of obtaining items .enumerated in the table. The appellant did not set apart c
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any quantity of raw naphtha for the purpose of obtaining petroleum
...,
Resin. It has merely subjected the residual Pyrolysis Gasolene for the
manufacture of Petroleum Resins. This residual Pyrolysis Gasolene cannot
be equated with raw naphtha which was obtained at concessional rate of
duty. (724-E-F]
D
1.2. Explanation 2 of the notification provides that in cases where
certain goods which are incidental, inevitable or involuntary to the process
of mamffacture of the products specified in the table ;tre produced in the
course of manufacture, the exemption under the notification shall. not be
denied on the ground that these goods are not products specified in the E
schedule. (724-G]
State of Haryrma v. Dalmia Dadri Cement Ltd., (1987) Supp. SCC 679
and Mis Steel Authority of India Ltd. v. Collector of Central Excise,· (C.A.
Nos. 3406-11/90 with C.A. No. 3178/90 decided on 30.7.1995 by Supreme
Court relied on.
F
2. Pyrolysis Gasolene being an intermediate product which is
produced in the factory of the appellant and it being utilised for the
Ii-
manufacture of other goods, it would be totally exempt from payment of
excise duty under the second exemption notification. The appellant is not
liable to pay any duty of excise on Pyrolysis Gasolene. The order of the G
Tribunal is set aside. (727-8-C]
:....
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4914 of
1991.
"""
From the Judgment and Order dated 19.9.92 of the Central Excise H
720
SUPREME COURT REPORTS
[1997] 2 S.C.R.
A and Gold (Control) Appellant Tribunal, New Delhi in A. No. E/268/91-C.
V. Lakshmi Kumaran, A.R. Madhav Rao, M.P. Devnath and Shekhar
Vyas for P.H. Parekh for the Appellant.
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