TMI Blog1998 (7) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in stationary batteries) and a quantity of 61,379.90 litres of solid KOH and LiOH (Lithium Hydroxide) despatched along with the stationary batteries manufactured by the appellants to their customers, on the ground that liquid electrolyte is an excisable commodity attracting 15% ad valorem of Special Excise duty under sub-heading 38.23 of the Schedule to the CETA, 1985, and not entitled to the benefit of exemption under Notification No. 217/86-C.E., dated 2-3-1986 since the stationary batteries for which the liquid electrolyte was used were exempt from duty under Notification No. 68/86-C.E., dated 10-2-1986. The Adjudicating authority has also imposed a penalty of Rs. 60,000/- upon the appellants. 2. We have heard Shri R. Nambirajan lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the marketability of the disputed products. Lastly, he submits that the demand is barred by limitation - the show cause notice dated 3-2-1993 covering the period from 14-1-1988 to 7-8-1992 is beyond the period of six months from the relevant date and the extended period of limitation is not applicable since the appellants were under a bona fide belief, based upon the 1988 Circular cited above that the mixing of electrolyte in solid form with water does not amount to manufacture of a new excisable commodity. He therefore, prays for setting aside the duty demand and the penalty. 4. The learned DR draws our attention to the finding in the impugned order that both the General Manager and the Senior Works Manager of the appellants had admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Potassium Hydroxide and Lithium Hydroxide are electrolytes for storage battery purposes (pages 956 and 709). The contention of the appellants that mixing with water is only for the purpose of dissolving of the solid flakes of KOH and LiOH has not been rebutted by the Revenue. The Collector s finding on excisability contained in para 18 of the impugned order, is based entirely upon the statements of General Manager and the Senior Works Manager of the appellants and there is no independent reasoning on how the mixing results in a distinct commercial commodity having a different name, character and use from the solid form so as to satisfy the test of manufacture which is one of the important criteria for determining excisability. The sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e resin more readily usable does not amount to manufacture since no new commercial product emerged in process. Applying the ratio of the above decisions which were cited by the learned Counsel for the appellants, we hold that the mixing of solid KOH with water and solid KOH with solid LiOH and water does not amount to manufacture since no distinct excisable commodity different from the solid form, comes into existence as a result of the mixture. We also note that the Senior Works Manager of the appellants has stated that solid KOH and solid LiOH are electrolytes in solid form and this submission has not been controverted by the Revenue. 8. In the light of the above discussion, we hold that the liquid electrolytes is not excisable; accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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