TMI Blog1968 (2) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... e is neither carbon dioxide nor compressed carbon dioxide known as such to the commercial community and therefore cannot attract Item 14-H in the First Schedule. Appeal allowed. - 289 to 311 of 1965 and 999 to 1001 of 1967 - - - Dated:- 5-2-1968 - K.N. Wanchoo, C.J. and R.S. Bachawat, J.M. Shelat and C.A. Vaidialingam, JJ. [Judgment per : Shelat, J.]. - These appeals, by certificate, are against the common judgment of the High Court of Punjab which dismissed the writ petitions filed by the appellant companies challenging the legality of excise duty levied against them under Item 14H in Schedule 1 to the Central Excises and Salt Act, 1 of 1944. Writ Petition 212 of 1966 by Tata Chemicals Ltd. also raises the same question. As both the appeals and the writ petition raise a common question of law they were heard together and are disposed of by this common judgment. 2. The appellant companies manufacture sugar by carbonation process as against sulphitation process employed by some other manufacturers of sugar and pay excise duty on the sugar manufactured by them under Item 1 of Schedule 1 to the Act. According to the affidavit of V.J. Bakre, Deputy Chief Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the CO2 pump and there compressed and then pushed into the tank. 3. The Tata Chemicals Ltd. manufactures among other products soda ash by solvay ammonia soda process. The solvay process as described by the said V.J. Bakre is as follows :- ***** 4. First common salt is dissolved in water and ammonia gas is passed through such dissolved salt called brine. The ammonia gas gets absorded in the brine. The solution so formed is called AB solution is introduced at the top of a carbonating tower and passed from section to section from the top to the bottom of the tower. At the bottom of the tower compressed carbon dioxide is forced through at a pressure of 40 to 50 points per square inch and is bubbled through the liquid in all the sections of the tower. The chemical reactions involved in the tower are : (i) ammonia gas plus, (ii) carbon dioxide plus, (iii) water of the brine solution. These react together to form ammonium bicarbonate which reacts with salt in brine to produce sodium bicarbonate and ammonium chloride. The sodium bicarbonate thus forced being much less soluble in the liquid is precipitated and is then taken out from the bottom of the tower. It is then filtered and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il 24, 1962 carbonic acid utilised in manufacture of sugar within the factory of production for clarifying and bleaching sugarcane juice or syrup from so much of the excess of Rs. 25 per metric tonne. 6. The contentions raised on behalf of the appellant companies and Tata Chemicals Ltd. may be summarised as follows :- (1) that the lime kiln is maintained to generate a mixture of gases and not carbon dioxide; (2) that at no stage in the process of generating this mixture and sucking it into the sugarcane juice for refining, carbon dioxide which forms one of the contents of the said mixture is either compressed, liquified or solidified; (3) that the mixture of gases so generated is not carbon dioxide as known to the market; (4) that according to the specifications laid down by the Indian Standard Institution and carbon dioxide content has to be at least 99 per cent; (5) that the mixture of gases so generated has no other use except for processing sugarcane juice; (6) that the said mixture is neither sold nor is marketable nor known to the trade; (7) that the excise duty sought to be recovered on the content of carbon dioxide in the said mixture of gases cannot fall un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies manufacturing soda ash by solvay process. 8. In support of their contentions the appellant companies as also the Tata Chemicals Ltd. relied on the specification laid down by the Indian Standard Institution and the several affidavits made by concerns using carbon dioxide for the manufacture of their respective goods. As most of them are identical, it is sufficient to take the affidavit of one Shantilal Patel as typical. The dependent there asserts that the company of which he is the senior chemist uses carbon dioxide in considerable quantity in manufacturing aerated waters, that carbon dioxide so used contains 99.5 per cent of pure carbon dioxide, that compressed, liquified or solidified carbon dioxide as known to the trade or sold in the market contains a minimum of 99 per cent carbon dioxide conforming to the specifications of the Indian Standard Institution, that such carbon dioxide is contained in steel cylinders under a pressure of minimum of 1,000 lbs. per sq. inch and that kiln or calciner gas is not known to the trade as carbon dioxide nor is it marketed as such. Dr. Homi Ruttonji whose affidavit was produced by Tata Chemicals Ltd. states that for the purpose of manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The proportion of carbon dioxide in these kiln gases varies from 25 to 33 per cent averaging about 30 per cent. The carbon dioxide leaving the washer is at a temperature of 60oC. Its pressure at the suction of the pump varies from 1.6 to 5 m. of mercury and the delivery pressure varies from 4 to 10 lbs. per sq. inch. It is also stated that the pumps known as CO pumps are fully analogous to air pumps. (see also Cane Sugar Handbook by Guildord L. Spencer and G.P. Meade, p. 138). The carbonation process according to Hugot is one of the cheapest, cleanest and most reliable process in the sugarcane industry ensuring standard quality of sugar. Roger's Industrial Chemistry (6th ed.) p. 415 in the chapter dealing with "Alkali and Chlorine production" states thus :- "The kilns used in the process are built and operated with special precautions to produce as high a concentration of CO as possible. In practice 41 to 43 per cent of CO2 is obtained in kiln gases with very little CO2 or O2, the rest of the gas being N15/2." At pp. 415 to 417 of the said work the solvay process is described in the same terms as in the affidavit in support of the petition of Tata Chemicals Ltd. J.A. Timm in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue argued these concerns undoubtedly require carbon dioxide in the processes employed by them while manufacturing sugar and soda ash and to meet their requirement they have set up lime kilns by which they produce kiln gas which includes carbon dioxide to the extent of about 20 to 35 per cent, which they in fact use after compressing it through a pump or otherwise at one stage or the other in their manufacturing processes. Nonetheless, it is possible to say that the lime kilns set up for the aforesaid purpose produce carbon dioxide and even if it be so, that at one stage or the other, through the pump or otherwise, the carbon dioxide so produced becomes compressed carbon dioxide as envisaged by the legislature when it decided to introduce Item 14-H in the First Schedule? It cannot be again said that by burning limestone with coke in the kiln the manufacturer actually produces kiln gas to which one of the constituents undoubtedly is carbon dioxide and which he utilises while producing his ultimate excisable goods. But if it is possible to say that what he produces is carbon dioxide during the process which Mr. Palkhivala termed as an integrated and continuous manufacturing proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bon dioxide which is inducted in the sugarcane juice for refining. The same must also be said of the solvay process used in the production of soda ash though in that case the percentage of carbon dioxide is larger than in the case of refining sugarcane juice. 14. The Act charges duty on manufacture of goods. The word "manufacture" implies a change but every change in the raw material is not manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character or use. The duty is levied on goods. As the Act does not define goods, the legislature must be taken to have used that word in its ordinary dictionary meaning. The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market. That it would be such an article which would attract the Act was brought out in Union of India v. Delhi Cloth and General Mills Ltd., 1963 Supp. (1) SCR 586 = 1977 E.L.T. (J 199). The contention there was that in the course of manufacture of vanaspati, a vegetable product from groundnut and till oil, the respondents brought into existence at an intermed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibes it. The analogy given by the learned Attorney-General of a manufacturer of cotton cloth also producing at an intermediate stage cotton yarn and such cotton yarn being liable to excise duty would not help the Revenue as cotton yarn obtained by such a manufacturer is known as such in the commercial community and brought to the market for being bought and sold. That cannot be said of kiln gas. If kiln gas were to be offered in discharge of a contract to supply carbon dioxide it would certainly be rejected on the ground that it is not carbon dioxide but is kiln gas. It is also not correct to say that because the sugar manufacturer wants carbon dioxide for carbonation purpose and sets up a kiln for it that he produces carbon dioxide and not kiln gas. In fact what he produces is a mixture known both to trade and science as kiln gas, one of the constituents of which is, no doubt, carbon dioxide. The kiln gas which is generated in these cases is admittedly never liquified nor solidified and is therefore neither liquified nor solidified carbon dioxide assuming that it can be termed carbon dioxide. It cannot be called compressed carbon dioxide as understood in the market among those who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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