TMI Blog1985 (7) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... nder item No. 14-H of the First Schedule to the Central Excises and Salt Act, 1944 (CET, for short). The appellants contention is that the gas in question is not compressed carbon dioxide within the meaning of item 14-H CET, whereas the contention of the Department is that it is. 3. We are concerned in both the appeals with item No. 14-H CET as it stood prior to its amendment by the Finance (No. 2) Act of 1977. The item, at the material time, reads as follows: 14-H. Compressed, liquefied or solidified gases, the following, namely : (i) x x x x x (ii) x x x x x (iii) x x x x x (iv) Carbonic acid (carbon dioxide) (v) x x x x x . The item was re-worded by the Finance (No. 2) Act of 1977 thus : 14-H. Gases, including liquefied or solidified gases, the following, namely :- (i) x x x x x (ii) x x x x x (iii) x x x x x (iv) Carbonic acid (carbon dioxide) (v) x x x x x (vi) x x x x x . 4. Carbon dioxide in gaseous, liquid or solid forms falls under item No. 14-H. However, during the material time, i.e. prior to the amendment of the . item in 1977, in so far as the gaseous form was concerned, only compressed carbon dioxide fell for classifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered that M/s. Mohan Meakins should pay central excise duty at the appropriate rates on the aforesaid quantity of CO, gas. He also levied a penalty of ₹ 4,50,000 on the assessee for contravention of the provisions of the Central Excise Rules. The assessee filed an appeal against this order which we are now disposing of as an appeal filed before us. 6. The facts in the case pertaining to M/s. Punjab Breweries Ltd. Ludhiana are more or less similar. The allegation against the assessee was that they had removed 9,427.2 Kgs. of compressed carbon dioxide gas during the period from June 1974 to June 1976, without payment of central excise duty amounting to ₹ 9,427.20. The Assistant Collector of Central Excise, Ludhiana who adjudicated the case held that the CO2 was liable to be charged to duty under item No. 14-H CET. However, on the basis of the material on record, he fixed the duty liability at ₹ 6,552.70. The appeal against this order was rejected by the Appellate Collector of Central Excise, New Delhi. We are now disposing of the revision application filed against the Appellate Collector s order as if it were an appeal filed before us. 7. We have heard at len ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court s decision in the South Bihar Sugar Mills case. In any event, the onus was on the Revenue to show that the CO2, in the present case was compressed CO2, as commercially known and understood. The Revenue had not led any evidence to this effect. Certain other decisions were also cited (to which we shall refer later) in support of the contention that the condition of goods for levy of excise duty was the condition in which they were removed for home consumption or export and the marketability was a decisive test to determine whether a given article fell under an excisable description or not. 10. The arguments advanced by Shri S.P. Bhatnagar, learned Counsel for M/s. Punjab Breweries were on the same lines. 11. On behalf of the Revenue, it was submitted by Shri N.V. Raghavan Iyer that the ISI Standard was framed for the purpose of quality control so as to have a certain uniformity in commercial transactions. However, it would not follow that goods which did not conform to ISI specifications would cease to be goods of that description. In the present case, the fact that the subject CO2 was not odourless would not militate against its being called CO2,. Only it would n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on at page 67 of the Glossary of Chemical Terms by Clifford A. Hampel and Gessner G. Hawley : Compressed gas. Any gaseous element or compound that is subjected to specific pressure and introduced into metal cylinders or special tanks for shipment in either liquid or non-liquid form. Common inorganic gases handled in this way are nitrogen, oxygen, ammonia, chlorine, carbon dioxide, helium, fluorine, hydrogen and nitrous oxide. Liquefied petroleum gases (LPG) comprise a sub-group of compressed organic gases; they include butane, butene, propane and propylene and are chiefly used as household and industrial fuels. Other organic gases in compressed forms are vinyl chloride, acetylene, and butadiene. The reasons for compression are economy and convenience in shipping, storage, and handling, and, in the case of flammable gases, the safety factor. The term has also been defined at page 269 of the Condensed Chemical Dictionary, Tenth Edition, revised by Gessner G. Hawley : Compressed gas-Any material or mixture that, when enclosed in a container, has an absolute pressure exceeding 40 psi at 21.1oC or, regardless of the pressure at 21.1oC has an absolute pressure exceeding 140 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y constituted authority. Para 4.2 says that the packing, marking, painting, labelling and transport of cylinders shall be in accordance with the requirements of the Gas Cylinder Rules, 1940 with such modifications or relaxations or both, as may be ordered from time to time by the Chief Inspector of Explosives, Government of India or other duly constituted authority. 15. The Gas Cylinder Rules, 1940 regulate the manufacture, possession, transport and importation of any gas which has been declared to be an explosive within the meaning of the Indian Explosives Act, 1884. The Government of India in the Department of Labour, has, by notification No. M-1272(1) dated 28-9-1938 under Section 17 of the Indian Explosives Act has declared any gas when contained in any metal container in a compressed or liquefied state to be an explosive. Rule 11 of the Gas Cylinder Rules provides that the working or internal pressure in any cylinder charged with a permanent gas shall not exceed 1800 pounds to the sq. inch at a temperature at 60oF. -Sub-rule (2) provides that cylinders charged with liquefiable gases shall not be filled in excess of the filling ratios specified in Schedule 2 Filling ratio me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pounds per sq. inch. The mere fact that at one stage or the other kiln gas is pressed at 40 to 45 pounds per sq. inch by pump or otherwise, cannot mean that it is compressed carbon dioxide. The above observations and finding were arrived at despite the clear enunciation in the same paragraph that At the same time the duty being on manufacture, and not on sale, the mere fact that kiln gas generated by these concerns is not actually sold would not make any difference if what they generate and use in their manufacturing process is carbon dioxide. The fact that the gas so generated has carbon dioxide below 99% and does not conform to the specification of the Indian Standards Institution also would not matter for the gas may be sub-standard provided what is produced is carbon dioxide. 18. Applying the ratio of the Supreme Court judgment, the fermentation gas in the present appeals would qualify to be called carbon dioxide. Since it does not conform to the Indian Standard Specification in that it is not odourless as enjoined by the specification, what could, at the most, be said is that it is substandard or off-standard carbon dioxide, not conforming to the Indian Standard Spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. The Indian Standard Specification was also relied upon in arriving at this decision. 21. The Counsels for the appellants relied upon the Supreme Court decision in Dunlop India Ltd. v. Union of India and others - AIR 1977 S.C. 597 = 1983 E.L.T. 1566 (S.C.). The Court held that the condition of the article at the time of importation was a material factor for the purpose of classification as to under what head duty would be leviable. We agree with the Counsels that it would follow from this judgment that the condition of the article at the time of its removal from the factory (which would include removals within the factory for captive consumption) would be a material factor for deciding the tariff entry under which it should be classified. We have found that the fermentation gas in the present cases was not compressed carbon dioxide within the meaning of Item No. 14-H, CET. The allegation in the present case is that the gas was captively consumed. At the stage at which it was consumed it was certainly not compressed carbon dioxide within the meaning of Item 14-H. Shri Iyer, however, contended that the word compressed refers to the state of the gas and not to the actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a certain odour, suitable for and was in fact put to use for flushing of beer by the appellants. It would be reasonable, therefore, to hold that it would have become equally useful for flushing of beer by other beer manufacturers. We have already noted the observations of the Supreme Court in the South Bihar Sugar Mills case that the fact carbon dioxide might be off-standard, not conforming to the Indian Standard Specification, would not mean that it would cease to be carbon dioxide so long as what was produced was in fact carbon dioxide. 24. Shri Iyer referred to the Tribunal s Order No. C-263 and 264/85-C dated 19-3-1985 [1985(21) E.L.T. 532 (Tribunal)] in Ilac Limited, Bombay v. Collector of Central Excise, Bombay. After discussing several authorities, the Tribunal said in that order that goods answering to descriptions of excisable goods need not necessarily conform to prescribed standards, qualities, purity, etc. to make them excisable. If they do not conform to standards, they would be sub-standard or off-standard but that would not mean that they are not goods of the excisable description. This order does not advance the case of the Department in view of our finding that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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