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PETITIONER: M/S. GUJARAT STATE FERTILIZERS CO.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE

DATE OF JUDGMENT:       28/02/1997

BENCH: S.P. BHARUCHA, S.B. MAJMUDAR

ACT:

HEADNOTE:

JUDGMENT:                THE 28TH DAY OF FEBRUARY, 1997 Present:              Hon’ble Mr. Justice S.P. Bharucha              Hon’ble Mr. Justice S.B. Majmudar D.A.Dave, Sr.Adv. and Ms. Meenakshi Arora, Adv. With him for the appellant. K.N.  Bhat.   Additional  Solicitor   General,  N.K.  Bajpai S.D.Sharma and  P.  Parmeswaran,  Advs.  with  him  for  the Respondent                       J U D G M E N T      The following judgment of the court was delivered:                       J U D G M E N T S.B. Majumdar, J:      These  six   appeals  are   preferred  by   the  common appellant, M/s  Gujarat state  Fertilisers Company,  against the central  excise authorities,  being aggrieved  by common judgment and  order dated  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 dated 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 Rules, 1944  promulgated under  the Central Excises and Salt Act, 1944.  The appellant  also claimed total exemption from excise duty  on the  manufactured ammonia utilised by it for production of  molten urea  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  notifications  was  sought  to  be  negatived  by issuance of six show cause notices by the excise authorities on the  ground that  the aforesaid  exemption  notifications

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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.      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.      The  Assistant   collector  of   central  Excise  after considering the appellant’s 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.      The collector  of central Excise, Vadodara, in exercise of powers  vested in  him under  section  35-E  of  the  act directed the  Assistant Collector  to file  appeals  to  the Collector, Central  Excise (Appeals)  against the  aforesaid orders on the ground that molten urea which was classifiable under chapter  31 Heading  31.08 was  further  used  in  the manufacture of melamine and hence the appellant would not be entitles to  the benefit  of the  aforesaid notifications as the spirit  of the  notifications was that ammonia should be used in  the manufacture  of a  soil fertiliser  and not any other commodity.      Pursuant to   the  directions  of  the  collector,  the

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Assistant collector  filed six  appeals on  diverse dates to the collector, central Excise (Appeals). The appellant filed cross objections submitting in the alternative that assuming that molten  urea was  not a  fertiliser, even  then it  was entitled to the benefit of Notification No.217 of 1986 dated 1st March  1986 which  exempted captively consumed excisable goods used  for the  manufacture of excisable final products as set out in the Table annexed to the said notification. As ammonia covered  by Chapter  28 was  mentioned as  input and molten urea covered by Chapter 31 was shown as output in the said notification,  even under that notification no duty was payable on molten urea.      The collector, central Excise (Appeals ) by his diverse orders between  13.3.1989 and  25.7.1989 allowed the appeals by holding that as molten urea was not a soil fertiliser and as  the   final  product   melamine  was  also  not  a  soil fertiliser, the  benefit of the aforesaid twin notifications was not  available to  ammonia and raw naphtha respectively. The appellant  thereafter preferred  six appeals  before the CEGAT. The  CEGAT by the impugned common order dismissed all these appeals  agreeing with  the  view  of  the  Collector, Central Excise  (Appeals  )  that  ammonia  was  used  in  a continuous process  for  ultimately  manufacturing  melamine which was  not a  fertiliser and as molten urea which was an intermediate product  was   also not  a soil fertiliser, the benefit of  these notifications  was not  available  to  the appellant.      The impugned  common order  of the CEGAT was challenged by Shri  Dave, learned  Senior  counsel  appearing  for  the appellant on  diverse grounds  In the  first instance,  Shri Dave submitted  that the  CEGAT had patently erred in law in taking the  view that  raw naphtha utilised by the appellant in manufacturing  ammonia did not earn the concessional rate of duty  as per Notification No.75 of 1984. It was submitted by him  that raw  naphtha was  utilised by  the appellant in manufacturing ammonia  and also  fertiliser, namely,  molten urea  which   is  a   chemical  fertiliser   and  that   the notification  nowhere   lays  down  any  condition  for  its applicability,  that   the  raw   naphtha  should   be  soil fertiliser and  not chemical  fertiliser. Similarly,  it was contended that  the appellant was entitled to the benefit of total exemption  from excise  duty as per Notification No.40 of 1985  dated 17.3.1985  as amended  from time  to time  as ammonia covered  by  the  said  notification  was  captively consumed in  manufacture of  fertiliser, namely, molten urea which was  a chemical  fertiliser, Shri  Dave submitted that even though  molten urea  might have  ultimately resulted in the manufacture  of melamine  which  was  admittedly  not  a fertiliser, on  the  express  language  of  these  exemption notifications, the  appellant had made out a case for relief as claimed by it and that the CEGAT had wrongly assumed that the   notifications   necessarily   required   the   product manufactured by the appellant to be only soil fertiliser and not  fertiliser   of  any   other  type   and  that  express terminology  of  the  notifications  did  not  have  such  a restrictive meaning . It was alternatively contended that in any case,  Notification No.  of 1986 applied to the facts of the present  case and  even on  that ground,  the demand cum show cause  notices were  liable to  be quashed.  Shri Bhat, learned Additional  solicitor General,  on the  other  hand, contended that the express terminology exployed by exemption Notification No.  75 of 1984 dated 1.3.1984 and Notification No.75 of  1984 dated  1.3.4985 had  to be appreciated in the light  of   the  connotation   of  the  term  fertiliser  as understood in  common parlance and should not be read in the

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light of  the subsequent Tariff Act which might have brought on the  statute book relevant chapters 31 or 32 . Therefore, the wording  of those  chapters and  the chapter notes could not be  relied upon  to cull  out the  meaning of  the  term fertiliser as  employed by  these notifications.  Ultimately when the  express terminology  of  these  notifications  was noticed by  him making  direct reference  to  the  concerned chapters of  the Tariff Act he did not pursue this point any further. However, his main contention was that on a conjoint reading of  the relevant  clauses of  the notifications,  it must be  held that  the Central  Government wanted to exempt either partially  or  wholly  excise  duty  for  only  those products which  were consumed  in a  continuous process  for ultimately manufacturing  soil fertilisers  which were to be made available  to agriculturists for improving the yield of crops and, therefore, if the final product which emerged was melamine,  which   was  not   a  fertiliser   at  all,   the intermediate predicts  as inputs  which had  gone  into  the manufacturing of  the final  product  of  melamine  in  this continuous  process   of  manufacture  could  not  earn  any concession or  full  exemption  from  excise  duty.  Learned Additional Solicitor  General Submitted  that the  aforesaid real object  underlying the  issuance of these notifications had to  be kept in view and the express terminology employed by these  notifications was required to be construed in that light .  It was  also contended  by him  that the  CEGAT had rightly taken  the  view  that  as  raw  naphtha  which  was utilised for manufacturing ammonia and ammonia which in this turn was utilised in manufacturing molten urea could not get the benefit  of the  aforesaid  exemption  notifications  as molten urea  was not  a soil  fertiliser and  the  exemption notifications were  issued only  with a  view to making soil fertilisers cheaper  so as  to get  them within the reach of farmers in  a more  advantageous manner. That it was not the intention of  the exemption granting authorities to give any benefit to  the consumers  of final  product  like  melamine which was not a fertiliser at all.      Having given  our anxious  consideration to these rival contentions, we  have reached  the conclusion that the CEGAT had erred  in not  accepting the contention of the appellant canvassed before  it .  Reasons are  obvious. It  is not  in dispute between  the parties  that the  appellant which is a public  limited   company  is   engaged   in   manufacturing fertiliser ammonia  and chemicals at its factory situated on the outskirts  of Vadodara in Gujarat state. That one of the raw materials  used by  it for manufacture of ammonia is raw naphtha which  is purchased  by it  from open market. During the relevant  period, ammonia  was covered  by chapter 28 of the Schedule to the Tariff Act of 1985. Ammonia manufactured by the  appellant was  captively consumed  by it in its Urea Plant for  the manufacture of molten urea. Under the Central Excise Tariff  Act, the excise authorities classified molten urea under chapter 31 thereof dealing with fertilisers. That duty was being paid by the appellant at the relevant time on molten  urea  under  Chapter  Heading  31.02  which  covered nitrogenous mineral and chemical fertilisers. It is no doubt true that  molten  urea  in  its  turn  was  also  captively consumed  by   the  appellant  in  its  Melamine  plant  for manufacture  of   melamine  which   admittedly  is   not   a fertiliser.      In the  light of  these background facts on which there is  no   dispute  the   short  controversy   posed  for  our consideration will  have to be resolved. We have, therefore, to turn to the concerned two notifications which are brought on the  anvil of scrutiny before us . Notification No, 75 of

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1984, as  amended from  time to  time,  sought  to  grant  a concession in  the rates of central excise duty as specified in the  schedule to  the said  notification on  goods of the description specified  in column (2) of the Table subject to intended use or condition as laid down in column(4) thereof. The Table to the said notification mentioned at sl. No.2 raw naphtha as  the commodity on which concessional rate of duty was  permitted   subject  to   the  condition  mentioned  in column(4) which  provided that  raw naphtha must be intended for use  in the  manufacture of  fertilisers and ammonia. We are not  concerned with  the proviso  the    said  condition mentioned in  column (4)  . Now  a mere  look  at  the  said notification shows  that when  raw naphtha  was utilised for manufacture of  fertilisers and  ammonia, it  would earn the concessional rate  of duty. It is not in dispute between the parties that  raw naphtha which the appellant purchased from the   open market  was in fact utilised by it in manufacture of ammonia  even leaving  aside the  further question  as to whether it  was utilised  for manufacture of any fertiliser. It is,  therefore, difficult  to appreciate  as to  how  the CEGAT could  persuade itself  to hold  that because  ammonia manufactured out of raw naphtha had resulted in molten  urea which  was  not  a  soil  fertiliser,  the  benefit  of  the aforesaid notification  could not  be made  available to the appellant which  had utilised  raw  naphtha  in  its  Plant. Moment it  was shown that raw naphtha was wholly utilised by the appellant  for manufacturing ammonia, the condition laid down in  column (4) of the notification got fully satisfied. On this  short ground  the reasoning  of the  CEGAT for  not extending   the benefit  of concessional rate of duty on raw naphtha to  the appellant  cannot be sustained.  However, as discussed hereinafter,  raw naphtha can also be said to have been utilised  in  manufacturing  molten  urea  which  is  a chemical fertiliser  covered by  the  term  ‘fertiliser’  as employed by  this very  condition in  column (4).  Thus this condition can  be said  to have  been fully complied with by the appellant.      Then next  we turn  to exemption  Notification No.40 of 1985 dated  17.3.1985. As  per  the  said  notification,  as amended from  time to  time, it  had been laid down that the Central Government  was  pleased  to  exempt  goods  of  the description mentioned in column (2) of the Table and falling under Chapters  25, 27,  28, 29, 31, 32, as the case may be, of the  Schedule to  the Tariff  Act, from  the whole of the duty of  excise leviable  thereon under   section  3 of  the Central  Excises   and  Salt   Act,  1944,  subject  to  the conditions, if  any, laid down in the corresponding entry in column (3)  thereof, Column (2) of the Table referred to the description of goods and at sl. no. 3  is mentioned ammonia. Thus ammonia  which was manufactured by the appellant out of raw naphtha  came under  the sweep  of  the  said  exemption notification.  The  condition  for  earning  exemption  from excise duty  on ammonia as laid down in column (3), which is relevant for our present purpose, is Condition No.(ii) which provides that  ammonia should  be used in the manufacture of fertilisers. It is not in dispute that ammonia was captively consumed by  the appellant  in   manufacturing molten  urea. Therefore, the  moot question  is whether  ammonia could  be said to have been utilised for manufacturing any fertiliser. It is  no doubt  true that molten urea in its turn became an input‘ for  producing the  final product,  namely,  melamine which admittedly  was not  a fertiliser.  But as required by the express language of the notification we have to find out whether molten  urea which  was manufactured  out of ammonia was a fertiliser or not. it is now well settled by  a catena

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of decisions  of this  Court that  for deciding  whether  an exemption notification  gets attracted  on the  facts  of  a given  case,   the  express   language  of   the   exemption notification has  to  be  given  its  due  effect.  In  this connection. we  may refer  to a  decision of  this Court  to which our attention was invited by shri Dave, learned Senior Counsel for the appellant. In M/s Hemraj Gordhandas vs. H.H. Dave, Assistant Collector of Central Excise & Customs, Surat and ors.,  [1978 (2) E.L.T (J.350)], a Constitution Bench of this Court  speaking  through  Ramaswami,  J  has  made  the following pertinent  observations  in  paragraph  5  of  the Report:      "It is  well established  that in a      taxing statute there is no room for      any intendment but had to the clear      meaning of  the words.  The  entire      matter is  governed wholly  by  the      language of  the  notification.  If      the tax  payer is  within the plain      terms of the exemption it cannot be      denied its  benefit by  calling  in      aid any  supposed intention  of the      exempting   authority.    If   such      intention can  be gathered from the      construction of  the words  of  the      notification   or    by   necessary      implication therefrom,  the  matter      is different  but   that is not the      case here..."      In steel  Authority of  India  Ltd.  Vs.  Collector  of Central Excise  [1996 (88)  E.L.T 314 (S.C)], one of us S.P. Bharucha, J.  Speaking for  a Bench  of two  learned judges, while dealing  with an  exemption notification in connection with raw naphtha laid down in paragraph 5 of the Report that due emphasis  had to  be given  to the clear language of the condition mentioned in the exemption notification. Same view was reiterated  in the case of Prince Khadi woollen Handloom prod. Coop.  Indl. Society  vs Collector  of Central  Excise [1996 (88) E.L.T. 637 (S.C.)].      In the  light of  the aforesaid settled legal position, we have,  therefore, to  confine our  selves to  the express language employed by the exemption granting authority in its wisdom while it issued Notification No.40 of 1985 . As noted earlier, the  notification clearly  refers to  the goods  of description specified  in column(8)  of the table annexed to the notification  and falling  under enumerated  chapters of this Tariff  Act. One  of the  chapters mentioned therein is chapter 31.  The said  chapter deals  with fertilisers. Note No.1 of  the said chapter lays down that Heading Nos, 31.02, 31.03,  31.04   and  31.05   cover   mineral   or   chemical fertilisers, even  when they  are clearly  not to be used as fertilisers. When  they  are  clearly  not  to  be  used  as fertilisers. When  we turn  to Heading No. 31.02, Subheading No. 3102.00  , we find the description of goods which refers to mineral  or chemical  fertilisers, nitrogenous.  Extracts from central  Excise Tariff  of India  1987-88 by  Shri R.K. Jain show that so far as Chapter 31 dealing with fertilisers is concerned,  Heading No.  31.02, amongst  others,  applies also to  urea, whether or not pure. The said entry is  found in clause  (2), sub  clause (A)  (viii) of  Note    2  under Heading No.  31.02. Sub  clause (D)  of clause  (2) of Notes under  Heading  No.  31.02  shows  that  liquid  fertilisers consisting of  the goods  of subparagraph (A) (ii) or (viii) above are also included in the said heading . It, therefore, becomes obvious  that liquid  urea is  considered  to  be  a

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chemical fertiliser.  It is  also not  in dispute  that  the excise  authorities   themselves  permitted   clearance   of chemical fertiliser,  molten urea,  under  sub  Heading  No, 31.02 of  the said chapter. It must, therefore, be held that the view  taken by  the   CEGAT that  molten urea  was not a fertiliser at  all, is  not  correct.  It  is  difficult  to appreciate as to how the CEGAT could come to that conclusion when it  was not  called upon  to go  into that  question by either of  the parties before it. The only contention before CEGAT was  whether  the  term  fertiliser  in  each  of  the exemption notifications  covered  chemical  fertiliser  like molten urea  or was  confined only to soil fertiliser. There was no  controversy between the parties as to whether molten urea was  chemical fertiliser  or not  . It  was an admitted position between  them that  it was  a  chemical  fertiliser exigible to  excise duty  under Tariff  Item 31.02  . Excise Authorities themselves  accepted the  classification to that effect from time to time and had raised no objection on that score  at   any  time.  It  is  ,  therefore,  difficult  to appreciate how  the CEgat  could persuade  itself to hold by making out  entirely a  new and a third case for the parties to the  effect that molten urea was not a fertiliser at all, specially in  the absence  of such  a pleading  of any party much less there being any evidence on the point.      Consequently, on  a conjoint  reading  of  the  express terms of  Notification No.  40  of  1985  and  the  relevant headings and subheadings of Chapter 31 of the Tariff Act, it must be  held that  the  appellant  by  captively  consuming ammonia  had   manufactured  molten   urea  ,   a   chemical fertiliser, It  is difficult to appreciate the contention of Shri Bhat,  learned Additional  Solicitor General  that  the spirit of  the notification  was to give the benefit only to soil fertilisers as final product which could be utilised by the cultivator  in agriculture and whit that end in view the notification was promulgated. On the express language of the notifications, it  is not possible for us to agree with this contention. If  that was  the view of the Central Government while promulgating  the said notification, nothing prevented the Central  Government from  indicating  that  it  was  not seeking to  cover the goods mentioned in Chapter Heading No. 31 or  in not confining the said exemption notification only to soil  fertilisers. In the absence of any such restrictive words  in  the  said  notification,  the  express  and  wide terminology fertiliser  employed in  the notification cannot be curtailed  by any process of reasoning about the supposed intention of  the Central Government Underlying the issuance of the  said notification.  It is also not possible to agree with the  contention  of  Shri  Bhat  ,  learned  Additional Solicitor General  placing reliance  on a  decision of  this Court in  The Tata  Oil Mills  Co.  Ltd.  Vs.  Collector  of Central Excise  [1989 (43)  E.L.T. 183 (sc)] that the  Court has observed  that in trying to understand the language used by an  exemption notification,  one should  keep in mind two important aspects  : (a)  the object  and  purposes  of  the exemption and  (b) the nature of the actual process involved in the  manufacture of  the commodity  in relation  to which exemption was  granted. It  must be  kept in  view that  the object and  purpose of  the exemption  has to  be called out from the  express  language  of  the  notification.  If  the express language  of the  notification does  not indicate  a contrary intention  conveyed by  the wide  words employed by the notification,  full effect  has to  be given to the wide terminology  employed  by  the  notification  otherwise  the result would  be that  in trying  to search for the supposed intention underlying the notification, the intention flowing

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from the  express language  of the  notification  would  get stultified or  truncated, To  recapitulate, on  the  express language  of   the  notification  an  inevitable  conclusion follows that  the Central  Government meant to exempt excise duty on   the  captively consumed ammonia if it had resulted in the  manufacture of fertilisers and as it had resulted in the manufacture  of  molten  urea  which  by  itself  was  a chemical  fertiliser   covered  by   Chapter  31   expressly mentioned in  the said  notification, the scope and ambit of the said  notification ,  the scope  and ambit  of the  said notification could  not be  curtailed on  the basis  of  the supposed latent  intention underlying the said notification, namely,  that  only  soil  fertiliser  was  required  to  be produced by  the captive  consumption of ammonia and not any other type  of fertiliser  like  molten  urea  which  was  a chemical fertiliser, If the contention of Shri Bhat. learned Additional Solicitor  General, is accepted , condition No. 2 as laid  down by  the said  notification  will  have  to  be redrafted by  adding the  restrictive words  soil fertiliser instead of  the wide  word fertiliser  as  employed  by  the exemption granting  authority in  its wisdom.  It is obvious that the  term fertiliser  is genus  which  may  consist  of various which may consist of various species of fertilisers, namely, chemical  fertiliser,  soil  fertiliser,  animal  or vegetable fertilisers,  as seen  from description of various types of  fertilisers found  in Chapter 31 of the Tariff. It has also  to be  noted that the chapter notes of the Chapter referred to  by the  said notification  have to be read as a part  and   parcel  of   the  said   notification.  In  this connection, we  may usefully  refer to  a decision  of  this court in  Fenner  (India)  Ltd.  vs.  Collector  of  Central Excise, Madurai  [ 1995 (77) E.L.T. B (S.C) ] wherein one of us S.P. Bharucha, J. Speaking for a two Member Bench of this court observed  that the Tariff Schedule contained rules foe its interpretation  which required  that for  legal purposes classification would  be determined on terms of the headings and any  relative Section  or  Chapter  Notes.  As  we  have already seen  Note to  Chapter 31  dealing with  fertilisers clearly states  that Heading No.31.02 would cover mineral or chemical  fertilisers   even  when  they  are  not  used  as fertilisers. Therefore,  it must be held that if molten urea as covered  by Heading  No. 31.02  was not  to  be  used  as fertiliser and  on the  other hand  was utilised as an input for producing  melamine, still  it would  remain a  chemical fertiliser within  the sweep of Chapter 31. If it remained a fertiliser, it  could not  be said  that ammonia  which  was captively consumed  for manufacturing  molten urea  had  not satisfied the  condition for  earning total  exemption under Notification No.40  of 1985  as  ammonia  had  resulted  for manufacturing molten  urea had  not satisfied  the condition for earning total exemption under Notification No.40 of 1985 as ammonia  had resulted  in the  manufacture of molten urea being a fertiliser.      That  takes   us  to  the  consideration  of  the  main submission  canvassed   by  Shri  Bhat,  learned  Additional solicitor General,  that the  CEGAT had  taken the view that ammonia which  was utilised by way of captive consumption by the appellant  for manufacture  of molten urea was subjected to a  continuous process of manufacturing which had resulted in the  end product  melamine which  was  admittedly  not  a fertiliser. That  may be  so. However,  the question remains whether ammonia  could be  said to  have been  used  in  the manufacture of  molten urea which was a chemical fertiliser. We have  to recall  that molten  urea itself is an excisable commodity even  though it  might  have  been  exempted  from

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payment of  excise duty  by a  notification  issued  by  the Central Government.  But for the said exemption notification molten urea  would have been required to bear the full duty. As seen  earlier, it  has  been  classified  as  a  chemical fertiliser  under   Heading     31.02  by   the  authorities themselves. For  levying excise  duty on  such a  commodity, namely, molten  urea, if  the department takes the view that it  is  to  be  subjected  to  excise  duty  as  a  chemical fertiliser on its clearance even for captive consumption, it is difficult  to appreciate  the contrary  stand of the very same authority  that it  would cease  to be a fertiliser for the purpose  of exemption  Notification No.40  of 1985, even though ammonia  results  in  the  manufacture  of  the  same excisable item,  namely, molten urea. Such a stand cannot be permitted to  be adopted  by the  department,  as  it  would amount to  blowing hot  and cold at the same time. If molten urea is  treated to be an excisable item under Heading 31.02 as a  chemical fertiliser,  it has to be treated on the same lines while  construing the  sweep of exemption Notification No.40 1985  which expressly  refers to  Chapter  31  amongst others. In  short, molten  urea must  be  treated  to  be  a fertiliser for  the purpose of its exigibility to duty under Heading 31.02  of the Tariff Act and simultaneously also for the purpose of exemption Notification No . 40 of 1985. It is also easy  to visualise  that if molten urea would have been sold by  the appellant  in outside  market instead  of being captively consumed  further for the manufacture of melamine, it  would   have  borne   full  duty  subject  to  exemption notification, if  any, under Tariff Item 31.02. Only because it  was   captively  consumed   in  the  onward  process  of manufacture which  had resulted  into melamine, it could not be said that the final product for the purpose of Excise Act had not  emerged in  the shape of molten urea by the captive consumption of ammonia.      Shri Bhat,  for the  Revenue, next  contended that  the term fertiliser  as employed  by the  notification  must  be given its  ordinary  meaning  that  is  accepted  in  common parlance. He submitted that to a common man fertiliser would denote only a soil fertiliser which could be utilised by the agriculturist for  improving his  agricultural yield.  It is difficult to  appreciate this  contention. As noted earlier, the notification in terms seeks to encompass in its coverage goods of  the description falling under chapters 25,27,28,29 and 31  or 32  of the  Tariff Act . when there is an express reference in  the notification  covering the  goods, amongst others, those referred to in Chapter 31 and as Chapter 31 in its turn  includes chemical  fertilisers, it is difficult to appreciate how  despite such  an express  reference  in  the notification, the  supposed  common  parlance  test  can  be adopted. In  fact,  such  was  not  the  contention  of  the department even  before the  CEGAT or for that matter before the Assistant Collector or the Collector (Appeals). The only stand of  the department was that exemption Notification No. 40 of  1985 would  not apply  to ammonia  as it had resulted into the  final product  melamine which was not a fertilisar and the  intermediate product of molten urea was utilised in a continuous  process of manufacture and, therefore. it must be held  that ammonia was captively consumed for the purpose of manufacturing  the ultimate  product of  melamine and not molten urea  . On the express language of the notifications, in question,  it is not possible to area with the contention of Shri  Bhat, learned Additional Solicitor General That the term fertiliser  employed by  the  said notification must be understood by  adopting  the  common  parlance  test  to  be referred to  soil adopting  the common  parlance test  to be

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referred to soil fertiliser only.      As a  result of  the aforesaid  discussion, it  must be held that  the collector of central Excise (Appeals) as well as the  CEGAT had  patently erred  in law in taking the view that Notification  No.40 of  1985 did  not  cover  captively consumed ammonia  utilised by  the appellant  as  input  for manufacturing  molten  urea.  It  must  also  be  held  that Notification No  .75 of 1984 applied to raw naphtha utilised by  the appellant for manufacturing ammonia and molten urea. The condition  for earning  concessional rate  of duty under Notification No  . 75  of 1984  on  raw  naphtha  and  total exemption from  duty as  per Notification  No. 40 of 1985 on ammonia must  be held  to have  been fully  satisfied by the appellant. Hence show cause notices were clearly incompetent and were  liable to  be quashed  and were rightly vacated by the Assistant Collector.      In  view   of  the  aforesaid  conclusion,  it  is  not necessary to go into the alternative contention canvassed by shri Dave,  learned Senior  Counsel for the appellant, about the applicability  of Notification  No. 217  of  1986  dated 2.4.1986 as amended from time to time .      In the  result, these  appeals succeed and are allowed. The common  judgment and  order rendered by the CEGAT in all the six  appeals as  confirming in  its turn  the  appellate orders passed  by the  Collector of  Central Excise(Appeals) are quashed  and set  aside and instead six orders passed by the Assistant  Collector, Central  Excise, Vadodara, between 12.11.1986 and  February, 1989  are  confirmed . As a result of our  decision, if the appellant becomes entitled to claim any refund  of excise  duty  paid  by  it  pursuant  to  the impugned order  of the  CEGAT as  confirming the  orders  of Collector of Central Excise (Appeals), such refund claim, if any, submitted  by  the  appellant  before  the  appropriate authorities will have to be decided in accordance with law . In the facts and circumstances of the case, there will be no order as to costs.