ORDER
G.A. Brahma Deva, J. (Member)
1. Shri Nambiar, ld. Counsel appearing for the appellants submitted that two issues are involved in the instant case (1) the excisability of Soda Ash Solution and (2) Eligibility of Soda Ash Solution to the exemption contained in Notfn. No. 217/86. He submitted that he is not pressing the issue with reference to the excisability of Soda Ash Solution. Nevertheless, the Department is not justified in denying the eligibility of Soda Ash Solution to the exemption contained in Notfn. No. 217/86. Issue with reference to the similar wordings of Notfn. has already been considered by the Supreme Court in the case of Indian Farmers Fertiliser Co-op Ltd. v. CCE, Ahmedabad reported in 1996 (86) E.L.T. 177 (S.C.).
2. In that case it was held that “raw naphtha used to produce ammonia which in turn is used in off-site plants namely water treatment plant, steam generation plant, inert gas generation plant and effluent treatment plant also eligible for such exemption since the said notification does not require that ammonia should be used directly in the manufacture of fertilizer”. In this context he drew our attention to the finding portion of the decision as appearing in Para 7 of the impugned order which is as under : –
“7. As far as the question of extending the benefit of exemption contained in Notfn. No. 217/86 to soda ash solution captively used, I find that this issue is squarely covered by the decision of CEGAT in the case of Mettur Chemical & Industrial Corporation Ltd. v. Collector of Central Excise reported in 1991 (52) E.L.T. 592 (Tribunal), where it was held that Hydrochloric Acid used for effluent treatment is not eligible to exemption contained in Notfn. No. 217/86. Following the ratio of the aforesaid decision of CEGAT, I hold that soda ash solution used for treatment of effluent is not eligible to exemption contained in Notfn. No. 217/86.”
Referring to the findings given by the Commissioner, he said that in view of the decision of the Supreme Court referred to above, the findings are not sustainable in the eye of law.
3. Heard Shri Narasimha Murthy for the Revenue. He said that Notfn. No. 217/86 was not the subject matter of dispute before the Supreme Court in the case referred to above and relied upon by the Counsel. Supreme Court has decided the issue with reference to the wordings of Notfn. No. 187/61. He said that wordings of Notfn. No. 187/61 is different from the wordings as envisaged in the Notfn. 217/86. Accordingly, department was justified in denying the exemption in terms of Notfn. 217/86 in the instant case. As per the wordings of Notfn., the assessee must use the item directly in the process of the manufacture of excisable goods.
4. On going through the submissions made by the both sides and case law referred to above, we find that there is strong force in the arguments advanced on behalf of the assessee. Both the notifications dealt with in or in relation to the manufacture of the excisable goods. We are not convinced with the arguments advanced on behalf of the Revenue. But wordings of the said notifications are different. The observations made by the Supreme Court particularly in Paras 9 and 10 of the said decision is relevant in this context and same is as under : –
“9. That leaves us to consider whether the raw naphtha used to produce ammonia which is used in the effluent treatment plant is eligible for the said exemption. It is top late in the day to take the view that the treatment of effluents from a plant is not an essential and integral part of the process of manufacture in the plant. The emphasis that has rightly been laid in recent years upon the environment and pollution control requires that all plants which emit effluents should be so equipped as to rid the effluents of dangerous properties. The apparatus used for such treatment of effluents in a plant manufacturing a particular end-product is part and parcel of the manufacturing process of that end-product. The ammonia used in the treatment of effluents from the urea plant of the appellants has, therefore, to be held to be used in the manufacture of urea and the raw naphtha used in the manufacture of such ammonia to be entitled to the said exemption.
10. In the result, the appeals are allowed. The orders under appeal are set aside. It is held that the raw naphtha used to produce ammonia which is used in the water treatment, steam generation, inert gas generation and effluent treatment plants of the urea plant of the appellants is entitled to the exemption provided by the Exemption Notfn. No. 187/61 as amended from time to time.”
In the instant case, the item in question was also used in connection with the manufacture of the excisable goods. There was no justification in denying the benefit of exemption in terms of Notfn. 217/86. In both the paras it was observed that “it is too late in the day to take the view that the treatment of effluents from a plant is not an essential and integral part of the process of manufacture in the plant. The emphasis that has rightly been laid in recent years upon the environment and pollution control requires that all plants which emit effluents should be so equipped as to rid the effluents of dangerous properties. The apparatus used for such treatment of effluents in a plant manufacturing a particular end-product is part and parcel of the manufacturing process of that end-product. The ammonia used in the treatment of effluents from the urea plant of the appellants has, therefore, to be held to be used in the manufacture of urea and the raw naphtha used in the ‘manufacture of such ammonia to be entitled to the said exemption as has been and in
turn was used in the process of the final excisable product i.e caprolactum.
5. In the facts and circumstances, following the ratio laid down by the Supreme Court, we do not find any force in the arguments advance on behalf of the Revenue and in the result, appeal is allowed.