TMI Blog1999 (1) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a penalty of Rs. 3,50,000/- under Rule 173Q of Central Excise Rules. The seized 4 tanks have been allowed on payment of redemption fine of Rs. 35,000/-. against the appellants on the ground that they are manufacturing/getting Fabricated SS/MS Tanks, Carbon dioxide Gas (CO2 Gas) and removing/consuming them without payment of Central Excise duty. On visit of the Officers on 3-9-1998 to the factory of the appellants and on studying the process of manufacture of CO2 gas it was noticed that the CO2 gas evolved during the fermentation of beer which was collected when it attained 99% purity and was used for carbonation of beer. It was noticed that some quantity of CO2 gas gets dissolved in the beer at the fermentation stage itself. The Officers also gathered that the company got fabricated SS/MS Tanks viz., brewery storage tanks, fermentation tanks, bright beer tanks, etc., and the same had been used without paying Central Excise duty. 3. It had been contended by the assessee that the CO2 gas emanated at the intermediate stage during the process of fermentation and even though it may contain carbon dioxide, it by itself is not known commercially as CO2 gas and it is not at all so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a well known proposition and has been so held in a large number of Supreme Court Judgments. It is his contention that marketability is the test and it is the Revenue s burden to discharge it in this regard. He submits that the revenue has failed to discharge their burden. He further submitted that for the purpose of utilising CO2 for marketing purpose, the appellants were required to install a separate machinery and plants to purify and make the goods in a marketable stage and such process were known as Carbonization and the cost of such machinery would be Rs. 40,00,000/-. He submits that the party did not instal the plant prior to 1995, i.e., the period in concern and hence this itself shows that the said gas which arose as a technological necessity during the fermentation of beer was not a marketable commodity. He relied on the judgment of the Supreme Court which laid down the test of marketability as in the case of Union of India v. Delhi Cloth And General Mills Company Ltd., as reported in 1997 (92) E.L.T. 315. He also relied on a similar judgment rendered by the Tribunal in the case of C.C.E., v. Travancore Electro as reported in 1998 (101) E.L.T. 486. He further submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood processing industries. He points out that the contract had been shown to the department. They were professional people and who had carried out the fabrication work. It was very clear that they being independent manufacturers, have to be held as liable for paying duty. Merely because the appellants had granted raw-materials and residential accommodation for the workers of the contractors, they were no ground to hold the appellants as the manufacturers. There was no financial flowback nor the contract workers were dummies of the appellants. He pointed out that the Tribunal in a similar circumstance held were merely because the assessee gave land and other benefits to the contractors, that by itself did not make the assessee the manufacturer but held the contractor to be the manufacturer as in the case of Metal Reconditioning Works v C.C.E. as reported in 1997 (89) E.L.T. 229. 10. Learned DR, Shri S. Kannan pointed out that in the case of Ugar Sugar Works Ltd. (Supra) and in the case of Mangalore Chemicals and Fertilisers as reported in 1998 (98) E.L.T. 490, Carbon dioxide which was marketed by the assessee was held to be goods and hence he submits that as in the present case, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of Ugar Sugars Ltd., and Mangalore Chemicals. In both the cases, there was no dispute with regard to the goods being marketed and traded. The same were removed by tanks and through pipeline. The ground taken there was that CO2 was in raw/impure stage and not in terms of ISI norm and they cannot be considered as goods. The Tribunal held that ISI norms was only for quality control and it is not conclusive for the purpose of classification unless Tariff entry links levy to goods confirming to ISI. Therefore, as can be seen from these judgments, the CO2 gas was produced independently and it was marketed, although in the case of Ugar Sugar Works, it emerged during the manufacture of alcohol from Molasses but the same was being sold after being put in cylinders. In the present case, such a situation does not arise at all. The appellants have shown that to bring it to marketable stage, a separate machinery and plant was required to be installed costing Rs. 40 lakhs. Therefore the CO2 emerged in the stage of manufacture of beer during the period in question was not capable of being marketed and hence the Hon ble Supreme Court judgment in the case of Ambalal Sarabhai is required to be ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Britania Biscuits Co. Ltd. v. C.C.E. as reported in 1997 (89) E.L.T. 22. In the case of Binny Ltd. (Engg. Works) v. C.C.E. as reported in 1998 (99) E.L.T. 681 it was noted that fabrication work at the site of the appellants by the job worker would not be a factor for holding the appellant to be the manufacturer as the transaction is on Principal-to-Principal basis. Similar view was expressed in the case of Metal Reconditioning Works v. C.C.E. as reported in 1997 (89) E.L.T. 229 wherein the fact that the labour force and working shop provided was not a factor to hold them to be liable for duty. 15. In the present case also there is no dispute that the goods were manufactured by the contractor namely Jaiswal Engineers and fabricators. Merely because the appellants had provided the land, raw materials and residential accommodation to the contract labourer that by itself is no ground to fasten duty on the appellants. Therefore the Collector s reasoning that contractor is not the manufacturer is required to be over-ruled in view of the Apex Court judgments and the Tribunal s judgments noted above. In that view of the matter, the appeal succeeds both on merit and on time bar an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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