ORDER
Jyoti Balasundaram, Member (J)
1. The issue for determination herein is the eligibility or otherwise of Low Sulphur Heavy Stock used for generation of steam to the benefit of exemption under Notification No. 147/74 dated 3-10-1974 read with Notification No. 356/77 dated 16-12-1977.
2. The respondents are engaged in the manufacture of fertilizers falling under TI 14HH of CET. They obtained L6 Licence for bringing excisable goods viz. LSHS falling under TI 11A i.e. petroleum products NES for use as feed stock in the manufacture of fertilizers without payment of central excise duty as per Notification above-mentioned under Chapter X procedure. The adjudicating authority confirmed demand of duty raised in the show cause notice on LSHS used in the generation of steam in the steam generation unit on the ground that the steam has not been used as feed stock in the manufacture of fertilizers and, therefore, that quantity would not be entitled to the confessional rate of duty available under the Notification to LSHS “used as feed stock for the manufacture of the fertilizers”. The Collector (Appeals) allowed the assessee’s appeal on the ground that the assessee has not sold the steam generated out of part of the quantity of LSHS received under Chapter X Procedure and the steam has been utilised in the manufacture of fertilizers falling under TI 14HH. He held that the steam is an absolute requirement for manufacture of fertilizers and being a raw material or input, it is not necessary that the same should remain physically present or be directly used in the manufacture of final product. Hence this appeal by the Department.
3. An identical issue came up for consideration before this Tribunal in the case of Collector of Central Excise, Patna v. Mis. Fertilizer Corporation of India Ltd. – Order No. 834-839/86-C dated 17-12-1986 wherein the Tribunal held that LSHS used for generation of steam cannot be held to be used as feed-stock in the manufacture of fertilizers. In paragraph 9 of the order the Tribunal relied upon its earlier decision in Neyveli Lignite Corporation Ltd. v. Collector of Central Excise, Madras, reported in 1985 (19) E.L.T. 617 for the meaning of “feed-stock”. In the Neyveli Lignite Corporation case (supra), the Tribunal held, following the dictionary definitions, that the feed-stock refers to raw material delivered to a machine for process. Following the principle enunciated in the NLC’s case, the Tribunal concluded in the case of Collector of Central Excise, Patna v. Fertilizer Corporation of India that LSHS used for generation of steam cannot be regarded as having been used as feed-stock in the manufacture of fertilizers. This order of the Tribunal in the Fertilizer Corporation of India case has been followed subsequently in the case reported in 1989 (40) E.L.T. 398 (Tribunal) – Collector of Central Excise v. Fertilizer Corporation of India. At this stage the learned Counsel, Shri Willingdon Christian seeks to distinguish the earlier order of the Tribunal by contending that, in coming to the conclusion regarding ineligibility of LSHS used for generation of steam to the benefit of Notification No. 147/74, the Tribunal based its finding on the concession of the Counsel for the respondents therein that “if the meaning under Glossary of terms of Petroleum Products be assigned to the expression feed stock used in the Notification then also it will merit exemption under the Notification”. In other words the learned Counsel sought to emphasise that the Tribunal’s finding was based upon the concession of the respondents’ Counsel. We do not agree. The Tribunal has taken into account the meaning of feed stock under the glossary of terms of petroleum products in arriving at this conclusion. We are, therefore, unable to distinguish the facts of Fertilizer Corporation of India case from the facts of the present appeal.
4. Respectfully following the ratio of the earlier orders of the Tribunal, we hold that the LSHS used in the generation of steam is not entitled to the benefit of concessional rate of duty in terms of Notification No. 147/74. We set aside the impugned order and allow the appeal. The cross objection abates.