TMI Blog1989 (5) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... e why the said amount of duty should not be recovered from them and why penalty should not be imposed on them. By their letter dated 17-9-1982, the appellants denied the allegations. In the main, their submission was that what was formed at an intermediate stage in the continuous and integrated manufacture of organic surface active agents was not SO3 as is known in commercial or technical parlance but a mixture of air and SO3 in which the latter was present only to the extent of about 7%. Such an air-SO3 mixture was not known, or capable of being marketed, as SO3. Another submission was that in view of the judicial pronouncements in force at the material time, duty was not leviable on SO3 produced and captively consumed within the factory, assuming that what was produced was SO3 as known to the market. They sought to support their contentions by production of certain affidavits and technical authorities. In due course, the Assistant Collector of Central Excise, Bombay passed an order on 13-12-85 holding that the SO3 manufactured by the appellants was goods within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944 and that it attracted Central Excise duty under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not SO3 as known to the market. 6. The question of dutiability of SO3 had come up before this Tribunal in a similar case - Appeal Nos. 2307/83-C and 1485/85-C - Dai-Ichi Karkaria Pvt. Ltd. v. Collector of Central Excise, Pune - disposed of by Order Nos. 199-200/86-C, dated 18-4-1986 - in which it was held that SO3 emerging at an intermediate stage in the manufacture of detergents was liable to duty under Item No. 14G, CET. However, Shri Taraporevala submitted that this decision could not be taken as a binding precedent in view of the admission on the appellants part that SO3 was sold in the market. In the present instance, however, the air-SO3 mixture was not sold nor was it capable of being sold as SO3. 7. Though the learned Counsel made a number of submissions in regard to the point at (c) above, we do not consider it necessary to set them out and deal with them in the view which we propose to take in respect of the point at (b) above. 8. In his reply, the learned Departmental Representative stated that the Tribunal s decision in the Dai-Ichi Karkaria s case applied squarely to the facts of the present case. He also submitted that Item 14G covered all sorts and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the air-SO3 gas mixture formed at an intermediate stage in the appellants factory in the course of the continuous and integrated process of manufacture of synthetic detergents was of the following composition :- (i) air-, 90 to 92% by volume; (ii) SO3 - 5 to 7.5% by volume; balance consists of SO2, sulfuric acid mist, and impurities like ash and dust - 2 to 3% by volume. It has been further averred that neither technically nor commercially the air-SO3 gas mixture of the above composition can be described as sulphur trioxide or sulfuric anhydride. Relying on certain authorities, the affidavit goes on to say that SO3, as known in commerce, must have a concentration of over 99%. 14. In his affidavit dated 27-4-1983, Shri V.V.R. Subrahmanyam, Professor of Oil Technology in the Bombay, University Department of Chemical Technology, has stated that air-SO3 gas mixture containing less than 10% by volume of SO3 and also containing nitrogen, oxygen, carbon dioxide etc. cannot be termed as sulphuric anhydride under any norm. It is further stated that SO3, free from any other contaminant, is either a solid (alpha and beta forms) or a liquid boiling at 44.5 C (gamma form), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as a liquid or as a solid. It is clear that the air-SO3 gas mixture containing less than 10% of SO3, produced by the appellants in the course of manufacture of synthetic detergents, is, according to the evidence led by the appellants which remains unrebutted by the Revenue, not known to commerce or technology as sulphuric anhydride i.e., the anhydride of fuming sulphuric acid. 21. In the case of Dai-Ichi Karkaria (supra), the process of manufacture was similar. The gas containing SO3, it was contended for the appellants, was full of impurity and was not known in the market as SO3. The Tribunal noted that SO3 did come into existence during the process of manufacture and that it was consumed in the manufacturing process. The counsel for the appellants had admitted that SO3 was sold in the market. The Tribunal held that, in the circumstances, the mere fact that it was not possible in the appellants factory to take out SO3 for chemical examination or that they did not market the same, would not be a good reason to hold that SO3 did not come into existence or that it was not marketable. The facts of the present appeals are distinguishable. We have noted that the appellants have prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , were that the mixture of gases was nothing but impure CO2, that the other gases which got mixed up were unavoidable on account of the processes employed, that the fact that in the process CO2 got mixed with other gases did not mean that CO2 which was intended to be and was in fact produced lost its characteristics as such, that the ISI specifications were not relevant being for cylindered CO2 bought and sold in the market as purer CO2 and that the CO2 produced by the manufacturers could be sold in the condition in which it was produced and used by the sugar mills and the factories manufacturing soda ash. After referring to technical literature and affidavits, the court observed that the evidence showed that commercial CO2 as brought to the market for being bought and sold had a minimum content of 99% CO2 and was either compressed and packed in steel cylinders or liquefied or solidified. It was held that the gas mixture in the cases before the court was known as kiln gas in the trade, not known to the market as CO2, not marketable unless CO2 was extracted out of it and this required an elaborate plant and compression in cylinders or liquidation or solidification. 23. In the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re copolymer beads made from divinyl benzene and styrene. The question was whether they would fell under Item No. 15A(ii) CET. The Tribunal, following the Supreme Court s judgment in Dunlop India Ltd. and Madras Rubber Factory v. Union of India and Others 1983 (13) E.L.T. 1566 (SC), wherein the court held but, ones an article is classified and put up in a distinct entry, the basis of classification is not open to question , held that the divinyl benzene copolymer beads answered to the description in the tariff entry. The Tribunal did not, therefore, consider any enquiry as to the marketability of the copolymer beads, their being goods having resinous or plastic character unnecessary. In the instant case, as we have noted, the air-SO3 gas mixture is not known as, and is not, sulphuric anhydride. 27. Another authority relied on by Shri Sunder Rajan in support of the contention that the purity of a substance is not a relevant consideration in determining its classification under the CET is this Tribunal s decision in Punjab National Fertilizers and Chemicals Ltd. v. CCE - 1988 (37) E.L.T. 155. The goods were bicarbonate of soda of the purity of 71.4% to 74%. According to the ISI s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m bichromate crystals but only sodium bichromate. Since sodium bichromate liquor was one form of sodium bichromate, the court held that the petitioner could not be heard to say that the liquor would not attract excise levy. The other reason was that there was evidence to show that sodium bichromate liquor had been offered for sale in that form itself by the petitioner; the Department had produced bills evidencing sale of bichromate liquor. In that instant case, there is no evidence of sale of the air-SO3 gas mixture. As already stated, what is subject to excise levy is not SO3 but the anhydride of fuming sulphuric acid and there is no evidence to show that the goods in the present case are known or marketable in commerce as such. 29. It may also be noted that the Delhi High Court in Delhi Cloth and General Mills Co. Ltd. and Another v. Joint Secretary , Government of India and Another 1978 E.L.T. (J 121) has, with reference to the petitioner s contention that the calcium carbide produced by them did not conform to Indian Standards Institutions specifications and that, therefore, they were not marketable goods, observed that the fact that the substance produced by the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as in this background that though rubberised tyre cord warp sheets were not put in the market, the court observed that that was not a relevant consideration for determining their liability to excise duty. In the instant case, the Department has not shown that the air-SO3 gas mixture is removed or removable to another factory as anhydride of fuming sulphuric acid. The judgment in the MRF case is not applicable. 31. Yet another decision relied upon by the DR is Order Nos. 26 and 27/89-C, dated 12-1-1989 in appeals Nos. ED (SB)1643 and 1722/84-C Dunlop India Ltd. and MRF Ltd. v. CCE, Madras. The question in those appeals was whether a mixture of formaldehyde and caustic soda and resorcinol was resol resin and as such was liable to duty under Item No. 15A CET during the relevant period. The Department s contention was that the said mixture resulted in A stage resin known as resol which fell under Item No. 15A CET. Dealing with the contentions of both sides, the Tribunal observed that there was enough authoritative material to show that resorcinol formaldehyde aqueous solution resulted in formation of A stage resin (resol) which was nothing but resorcinol resin. The Tribunal further ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
