TMI Blog1990 (2) TMI 200X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants require Sulphur-trioxide (SO3). Duty-paid oleum was purchased by the appellants. The oleum was heated as a result of which SO3 was generated and it was used in the manufacture of OSAA. Show Cause Notices were issued by the Department charging that the appellants had contravened the provisions of Central Excise law inasmuch as they had manufactured and removed SO3 classifiable under TI-14G of the Schedule and suppressed material facts with intent to evade payment of duty amounting to Rs. 59,19,180.32 for the period 1-4-1977 to 27-9-1984 in the first appeal and duty of Rs. 7,78,072.42 in the second appeal for the period 28-9-1984 to 28-3-1985. These Show Cause Notices were duly answered by the appellants who contended that since the appellants were located at a distance away from the factory of manufacture of SO3 it was not possible for the appellants to receive the gas through a pipe line. That was why they purchased oleum - a physical mixture of SO3 and Sulphuric Acid - which had already suffered tax at the hands of the manufacturer. The appellants only heated the oleum so as to obtain SO3. The Sulphuric acid only acted as a carrier for SO3 and SO3 was generated by mere h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eating can neither be considered as manufacturing activity nor could the product SO3 obtained from the Carrier be considered as a distinct and separate product the Original SO3. He stated that his case is fully covered by the decision of this Tribunal in the case of Tata Oil Mills Co. Ltd. v. Collector of Central Excise [1989 (43) E.L.T. 132], wherein it has been clearly held that Air- SO3 gas mixture which emerged as an intermediate product in the course of continuous integrated process of manufacture of Organic Surface Active Agents was not anhydride of faming Sulphuric Acid falling for classification under Item No. 14-G of CET. He said that the product SO3 in the gaseous form was neither sold nor marketable, hence same cannot be considered as excisable goods. He said that the Assistant Collector has held that Sulphur Trioxide in gaseous form was excisable goods based on the ruling given by the Allahabad High Court in case of Union of India Others v. Union Carbide India Ltd., [1978 (2) E.L.T. J.I], but the same was reversed by the Hon ble Supreme Court in the very case in Union Carbide India Ltd. v. Union of India Others [1986 (24) E.L.T. 169 (S.C.)]. He drew our attention to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xture obtained during the course of the continuous and integrated process of manufacturing OSAA was commercially known as SO3 was not urged by the counsel for TOMCO since technical literature had not specifically stated that such impure SO3 could not be considered technically as SO3. There was no finding by the Tribunal on the specific admitted issue. The decision in the TOMCO case is neither binding nor applicable to the facts of this case as the ratio of the decision is contrary to the two earlier decisions of this Tribunal in the cases of Andhra Sugar Limited v. Collector of Central Excise [1989 (42) E.L.T. 613 (T)] and Dai-Ichi Karkaria Pvt. Ltd. v. Collector of Central Excise, Pune (Order Nos. 199-200/86-C dated 18-4-1986). He submitted that Andhra Sugar s case, based on earlier decisions, is on all fours and is applicable to this case. Though the commodity SO3 as such was not sold by the appellants (as in TOMCO s case), in view of the fact that SO3 was different from oleum and emerged as a new commodity, as admitted in Tomco s case, it was liable to excise duty. In view of the fact that Sulphur Trioxide was manufactured by the appellants, it is classifiable under 14-G of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that what was obtained in the process was SO3 in gaseous form and not anhydride of fuming Sulphuric Acid. Air- SO3 in the gaseous form was neither sold not marketed. In the gaseous form, it was not known to the market and never sold in India or abroad. SO3 was sold in liquid or solid forms. The burden is on the Department to prove marketability of commodity before classifying under the Tariff which has not been discharged in the present case. There is no positive evidence to show that SO3 was sold in the gas form but only a hypothesis. He urged that as SO3 was not marketable in the form of gas, following the ratio of the decision in case of Ambalal Sarabhai, this should be treated as not liable to excise duty. He submitted that the Tribunal s decision in the Andhra Sugar case cannot be relied on in view of the fact that the decision of the Supreme Court in case of Union Carbide Co. was subsequent and it was not before the Tribunal at that time. 9. We have given our anxious consideration to the arguments advanced on both the sides and perused the records. The facts are undisputed that the appellants have purchased oleum and by the process of heating the oleum, SO3 in the gas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rritant to tissue. Oxidizing agent. Fire risk in contact with organic materials. An explosive increase in vapour pressure occurs when the alpha form melts. The anhydride combines with water, forming sulfuric acid and evolving heat Containers. (Stabilised, liquid) 750-lb drums; tanks cars. So far as Sulphur Trioxide is concerned, it is also described as Sulphurix anhydride. We can find this in the Encyclopedia of Chemical Technology: Vol. 22 at page 215, Sulfur Trioxide has been described as under:- The anhydride of sulfuric acid, SO3, is a strong organic sulfonating and dehydrating agent which has some specialised uses (see Sulfonation and Sulfa-tion). Its principal applications are in production of detergents and as a raw material for chlorosulfuric acid (qv) and 65% oleum. It is an admitted fact that the product S03 coming into existence as a result of heating oleum at a temperature of 250 C in a closed circuit is Sulphur Trioxide having purity of 100%. In view of the detailed description and characteristics of these two terms in the above technical literature, it is clear that these two articles are known by different names for different purposes. In the view we have ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as Sulphuric anhydride and in the gaseous form was not known to trade. As against these affidavits the Department has not brought on record any evidence to show that the air- SO3 gas mixture is marketable and known to the market as Sulphuric anhydride. Nor have the deponents of the affidavits been cross-examined by the Department in spite of their specific offer for cross-examination. It may be seen from the contents of the three affidavits and the technical authorities that Sulphuric Anhydride exists either as a liquid or as a solid. It is clear that SO3 gas-air mixture i.e., SO3 produced by the appellants in the course of manufacture of OSAA is, according to the evidence led by appellants, which remains unrebutted by the Revenue, not known to commerce or technology as Sulphuric anhydride, i.e., the anhydride of fuming sulphuric acid. The same is the case also with pure SO3 gas, assuming, as the D.R. contends, that this is the stage at which the Department seeks to levy excise duty. In this context the decisions in 1989 (43) E.L.T. 132 (Tribunal) (Supra) are relevant. 11. In Andhra Sugar s case [1989 (42) E.L.T. 613], the Tribunal has proceeded to classify Sulphuric trioxid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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