TMI Blog1996 (5) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed through a pipe line to gas distributor from where it is injected back to the final beer at 3.5 kg/cm2 pressure to a gas volume of 2.8 v/v. 3. The learned lower authority took note of the position prevailing before introduction of the new Tariff Act, 1985. The appellants took the plea before the said gas manufactured by them was not marketable as it did not conform to the ISI Standard. The learned lower authority however, after taking note of the appellants plea has observed as under : 9. In view of what has been discussed in the preceding paragraphs. I am of the view that the carbondioxide arising as a by-product in the manufacture of Beer, is an excisable commodity falling under S.H. 2811.10 of the Central Excise Tariff Act, 1985. I am also of the view that the excisability of this material is not affected because of its coming into existence as a by-product in the process of manufacture of another item. In the present case, the fact that the carbondioxide does not conform to the ISI standards will not affect the excisability of the said carbondioxide in view of the fact that tariff sub-heading No. 2811.10 does not make any mention about the purity required or that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 68 and for reason of captive consumption had claimed exemption under Notification 118/73 available in respect of Tariff Item 68 goods captively consumed. The authorities however, sought to classify the same under Heading 14H. The learned CCE(A) did not decide the issue on merits and held as under : On a perusal of the records I do not see that in the instant case any expert opinion in respect of the classification of the CO2 was obtained, especially when there was a conflict between the Department and the appellants in relation to its classification. In the absence of such opinion obtained from the expert neither the Department could say that the gas in question would fall under Item 68. Therefore, unless expert opinion is called for, the classification of the product under an item of tariff cannot be decided. In the circumstances I set aside the impugned order without prejudice to merits of the case on either side so that the samples of product may be drawn and sent to the expert like Chemical Examiner for his opinion about its classification and then the matter may be decided, after supplying the copy of the Chemical Examiner s opinion to the appellants and inviting their ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gely enough, there is a subsequent letter addressed to the appellants by the Supdt. and which has been endorsed to the AC Central Excise, Kakinada dated 5-6-1990 wherein the following is set out : 2. The following information may kindly be furnished to this office to study the matter, with ref. to the orders on the subject. (i) The Purpose for which the return has been filed by you. (ii) A detailed report on the manufacturing process of carbon dioxide (CO2) in your factory and when and where it has been obtained. (iii) How the carbon dioxide has been utilised in your unit. (iv) Why no Central Excise licence in Form L4 has been taken by you for the production of carbon dioxide, which is an excisable commodity under sub-heading No. 2811.10 of the Central Excise Tariff Act. 1985. (v) How you have become eligible for exemption from payment of duty on the CO2 produced by you. 3. The production clearance figures for the last 5 years may be furnished. The appellants in their letter dated 6-6-1990 addressed to the Supdt. of Central Excise have referred to this letter informing the Supdt. that they will be sending necessary information as sought for. On 14-6-1990 they have f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of CO2 Gas falling under sub-heading No. 2811.10 of Central Excise Tariff Act, 1986 - Request for submission of particulars - Regarding. ......... It is observed that during the course of manufacture of BEER in your factory CO2 Gas is generated as a by-product and the same is consumed by you in the manufacture of Beer itself. 2. In this connection, you are hereby directed to furnish the total quantity of CO2 Gas produced as a by-product during the course of manufacture of `Beer and value thereof for the years 1987-88, 1988-89, 1989-90, 1990-91, and 1991-92 and for 1992-93 upto JULY, 1992. As this product manufactured by you appears to be examined investigated into the levy of Central Excise duty, immediate respond is requested for furnishing the particulars. Yours faithfully Sd/- (N. VENKATESWARLU) SUPERINTENDENT OF C.E. (A.P.) KAKINADA DIVN. The appellants subsequently exchanged some correspondence with the Supdt. in their last letter dated 28-10-1992 wherein the following is set out : During the process of Fermentation of Beer, CO2 is evolved naturally and said CO2 is sent to the Compressor through Pipe line and after compressing same, again through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was no suppression of fact on the part of the appellants. He pleaded that the authorities themselves were not sure whether duty could be demanded for the carbon dioxide captively consumed as in the last letter of the department, before the issue of show cause notice dated 30-7-1992 what has been stated therein is that the Department was examining about the levy of duty on the goods in question produced in their factory. He therefore, pleaded that the demand raised for the period 11/88 to 18-6-1992 was barred by limitation. 6. Shri Arulsamy, the learned DR for the Department adopted the reasoning in the impugned order. He pleaded that the appellants were using the carbon dioxide gas for injecting into the beer and therefore, the same has to be held to be carbon dioxide notwithstanding any test not having been done. 7. We have considered the pleas made by both the sides. We observe that from the technical write up one of the modes of production of carbondioxide is through the process of fermentation. Following is set out in this regard in the Mc GrawHill Dictionary of Scientific and Technical terms : Carbon dioxide (Chem.). CO2 A colourless gas; density at S.l.P., 1.976 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants that the demand was barred by limitation having been raised beyond the period of 6 months, and that there was no ground for invoking the longer period of limitation. We observe that the issue has been pending finalisation right from 1983 when the matter was remanded for de novo consideration when the order in appeal was passed on 18-2-1983. Thereafter in any case the appellants have been filing the annual returns regularly in regard to the quantum of carbon dioxide gas used by them year after year and they have clearly come on record as to the production and use of the goods in their factory. The authorities also appear to have been in doubt whether duty is chargeable in respect of the goods used by them as the Supdt. of Central Excise, in his letter dated 30-7-1992 has indicated that the question of leviability was being examined and has aked information about the value of clearances during 1987-88 and upto July/92. The appellants also came on record in regard to production and use of the gas in question and it was for the authorities to have taken action for charging duty in respect of the same if duty was required to be charged. Having slept over the matter the autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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