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2022 (4) TMI 363 - AT - Central ExciseLevy of duty of excise - Valuation - captive consumption of by-production - Carbon Dioxide (CO2) gas - manufacture of Beer - non-excisable goods or otherwise? - period from March, 2010 to December 2014 and from January 2015 to June 2015 - denial of benefit under N/N. 67/1995 dated 16.03.1995 - Liability of duty of intermediate goods - Rule 9 of Central Excise Rules - marketability of goods - HELD THAT:- The appellants, admittedly, are engaged in manufacture of alcoholic liquor for human consumption namely Beer excisable under Rajasthan State Excise Act. The duty has been demanded on Carbon Dioxide gas which evolves during the process of manufacture of Beer at fermentation stage which is a separate good under Central Excise Tariff Sub Heading No.28112190 of the First Schedule to Central Excise Tariff Act, 1985. The appellant is manufacturing an alcoholic drink i.e. Beer which is not excisable under Central Excise Act but is excisable under Rajasthan State Excise Act. The show cause notices have been issued under Central Excise Act. This Act is a central legislation enacted pursuant to the legislative power conferred on the Parliament in terms of Article 246 read with Entry 84 of List-I of the Seventh Schedule to the Constitution during the relevant Entry No.84 - perusal makes it ample clear that alcoholic liquors for human consumption as that of Beer are out of the scope of Central Excise Act. Though the goods which are specified in First and Second Schedule to Central Excise Tariff Act, 1985 only are excisable goods: But alcoholic liquors including Beer find no mention in the said Schedules of Central Excise Tariff Act, 1985 because of the above Entry No.84. There is no denial that such alcoholic liquors are subject to Excise Duty under State Excise Law. Since the manufactured good in question is Beer, an alcoholic liquor for human consumption, the manufacturing process is out of the purview of Central Excise Act. Question of any intermediate product arising during such manufacturing process, irrespective find mentioned under Central Excise Tariff, cannot be made liable for Excise Duty under Central Excise Act. Whether the Carbon Dioxide (CO2) evolved herein confirms the double standard test of manufacture and marketability? - HELD THAT:- It is observed that CO2 herein is produced in the fermentation tank during fermentation of a mixture called “wort” which ultimately ferments to Beer, the final product however with the simultaneous inevitable emission of CO2 gas. This particular observation is sufficient to hold that formation of CO2 cannot be called as manufacture - no separate treatment is given to “wort” mixture for emission of CO2 which is inevitable consequence of fermentation of said “wort” mixture into Beer that CO2 in the present facts and circumstances cannot be held to have been manufactured product which is excisable. In the present case, CO2 has emerged in the manufacturing process of such product to which Central Excise Act does not apply. For this reason also Excise Duty cannot be levied upon so emitted CO2 irrespective it has been captively used in further process for manufacturing the impugned alcoholic liquor. Marketability of goods - HELD THAT:- Any good which is known to market attracts Excise Duty when cleared provided it has been manufactured. As already held above CO2 herein was not the product of manufacturing process. However, it is an admitted case that the appellants in addition of using CO2 captively were also purchasing CO2 for the same purpose of giving effervescence to the manufactured Beer. The marketability cannot be denied. Also Carbon Dioxide has a specific Tariff Entry under Central Excise Act cannot be denied. But the fact remains is that impugned CO2 is not a manufactured product, as held above, it fails to satisfy the dual test. Question of levy of Excise even under Central Excise Act does not arise. Applicability of Notification No.67/95 dated 16.03.1995 - HELD THAT:- The Carbon Dioxide irrespective of being an independent product under Central Excise Tariff but in the present case, it is a product that has arisen inevitably in such a manufacturing process that does not attract the levy of Central Excise Duty under Central Excise Act question of imposing demand and confirmation of duty on Carbon Dioxide in given circumstances is highly unsustainable. The captive consumption of such CO2 was only to efficiently manufacture the non-excisable Beer/the final product. The orders confirming duty on the quantity of CO2 being captively used by the appellant is therefore liable to be set aside. Appeal allowed - decided in favor of appellant.
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