TMI Blog1989 (8) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... a penalty of Rs. 30,000/-. 2. The facts of the case, briefly, stated are that the appellants were engaged in manufacture (as the Revenue would put it) or recovery (as the appellants would put it) of caustic soda from spent caustic soda lye. The Superintendent of Central Excise who along with his officers visited the factory of the appellants on 25-1-1985 and 30-1-1985 found on scrutiny of the factory records that the appellants were undertaking concentration of caustic soda liquor from spent caustic soda lye received from textile mills and returning the same after process to the Mills under their delivery slips. On further scrutiny, the Supdt. noticed that the appellants had received spent caustic soda lye from M/s. Darshan Corporatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1974. By this notification, the Central Government exempted caustic soda falling under Item No. 14B of the First Schedule to the Central Excises Salt Act, 1944 and recovered from spent caustic soda lye or black liquor obtained during the manufacturing or processing or manufacturing and processing of excisable goods or non-excisable goods in a factory other than the factory where the said spent caustic soda lye or black liquor was obtained, from the whole of the duty of excise leviable thereon. This exemption was subject to certain conditions; (a) the appropriate duty of excise, or the additional duty of customs, as the case may be, should have already been paid on the caustic soda initially taken for use during the aforesaid operations; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recovering caustic soda out of the said lye and returning it to M/s. Darshan Corporation which, in turn, returned it to M/s. Raipur Mfg. Co. Ltd. It was also submitted that M/s. Darshan Corporation merely acted as an intermediary between the textile mill and the appellants. They relied on the statement recorded from Shri K. Hathesing of Darshan Corporation in which he had stated that the corporation was receiving caustic soda lye from Raipur Mills and were sending the same to the appellants for concentration and, after concentration, it was being returned to the Mill. Reliance was also placed on the statement of Shri R.S. Bhatt, Assistant Manager of the appellant firm in which he had stated that the appellants were receiving spent lye from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants were, on recovery of job charges, concentrating spent lye received from Darshan Corporation which, in turn, had received it from Raipur Mfg. Co. Ltd., and that the ownership continued to vest in Raipur Mfg. Co. Ltd. to which the recovered caustic soda was factually returned by Darshan Corpn. The appellants also had placed on record some delivery challans evidencing the transit of the spent lye from the textile mill to Darshan Corporation and of the concentrated liquor from Darshan Corporation to the textile mill. 7. The above evidence, in our opinion, overwhelmingly points to the conclusion that Darshan Corporation was acting only as an intermediary. It did not acquire ownership of the spent lye which continued to vest in Raipur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing excisable or non-excisable goods. Thus, the two conditions as regards ownership and return of the recovered caustic soda as set out in the notification were not fulfilled. In short, the existence of the intermediary firm seems to have clouded the appreciation of the evidence by the Additional Collector. He seems to have felt that he was fortified in his conclusion by the absence of any provision in the notification permitting the existence of an intermediary. As set out earlier, in our view, the evidence on record points to the conclusion that the two conditions had been fulfilled. Therefore, in our opinion, the appellants were eligible for the benefit of duty exemption on the caustic soda recovered by them from the spent caustic so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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