TMI Blog1978 (9) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... ner, but is only used for captive consumption, viz., for conversion to basic chromium sulphate liquor for mineral khaki dyeing and for manufacture of basic chrometan for sale as well as conversion to sodium bichromate crystal as necessary for the manufacture of crome oxide green. Under Tariff Item 14AA (l) bichromates of potassium or sodium are liable to excise duty at the rate of 10 per cent. ad valorem. The item mentioned in the tariff list is sodium bichromate in crystalline form or, in other words, Sodium bichromate crystals and will not refer to sodium bichromate liquor. Sodium bichromate liquor is not the end product, but only an intermediary product and is, unlike sodium bichromate crystals, not a product offered for sale. However, the petitioner as well as the Central Excise authorities had been acting on the mistaken impression that sodium bichromate liquor - produced by the petitioner and used for captive consumption would also fall under Tariff Item 14AA (1) and, on account of that mistake, the Excise authorities had been demanding the petitioner to pay excise duty on the product. Since sodium bichromate liquor is neither `goods' nor `excisable goods' within the meaning ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putting forth its objections to the revised demand and, on that score also, the demand notice should be quashed. Thus, the petitioner seeks quashing of the demand notice on two grounds, viz., (1) that sodium bichromate liquor is not an excisable item and (2) that, in any event, no demand can be made without the petitioner being given an opportunity to put forth its objections. 3. The respondents have filed a common counter affidavit to controvert the averments contained in the petitioner's affidavit. The respondents have stated that since sodium bichromate liquor manufactured by the petitioner was consumed within the factory of the petitioner for the purposes of dyeing fabrics and for further manufacture of sodium bichromate crystals, assessment was being made on the basis of the assessable value determined under Section 4 (b) of the Central Excises Act up to 30-9-1963 and the petitioner had accepted the arrangement adopted by the department. The petitioner was following the self-removal procedure prescribed in Chapter VII-A. The assessable value is determined by the cost accounting methods duly certified by a Chartered Accountant. Since the assessable value furnished by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium bichromate liquor is also liable to payment of excise duty. The respondents have, therefore, justified the demand and prayed for the dismissal of the petition. 5. Having regard to the contentions of the parties, the two questions that arise for consideration are - (1) Whether sodium bichromate liquor will fall within the definition of bichromate of sodium occurring in tariff Item 14-AA(1) so as to attract the levy of excise duty ? and (2) If sodium bichromate liquor is an excisable item, whether the respondents are justified in raising the demand without giving opportunity to the petitioner to show cause against the revision of assessment ? Mr. Dilip Singh, learned counsel for the petitioner, strenuously argues that sodium bichromate liquor is being manufactured by the petitioner only for captive consumption and it is only an intermediary product and not an end product and there is a considerable difference between sodium bichromate liquor and sodium bichromate crystals and as such, it is only sodium bichromate in its crystalline form that will attract excise duty. He points out that sodium bichromate liquor is prepared in the following manner. The raw materials are gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' as known to the market, an excise duty may be leviable under item 23." The second case is South Bihar Sugar Mills v. Union of India - 1978 E.L.T. (J 336). The controversy in that case was whether the gas generated by the appellant company was kiln gas and not carbon dioxide as known to the trade and therefore did not attract Item 14H in the First Schedule of the Act for levy of excise duty. It was contended by the Revenue before the Supreme Court that kiln gas admittedly contained a certain percentage of carbon dioxide and could be marketed as such and therefore, it would attract excise levy. The Supreme Court repelled the contention in the following manner :- "It is true, as the Revenue contended, that the gas produced through the kiln can be made marketable in the sense that it can be sold in the very same condition in which it is produced to concerns interested in the carbonation process through, for example, pipes. But, apart from such a method of disposal being uneconomic and hardly likely to be employed by the trade, though it is possible in theory, what would be transported is that which is produced through the kiln, viz., kiln gas containing, among other things, certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of the manufacture, the petitioner has brought into existence a substance which will fit in with the description of sodium bichromate. In support of his argument, the counsel places reliance on the following passage occurring in Union of India v. Delhi Cloth and General Mills - 1977 E.L.T. (J 199): "Excise duty is on the manufacture of goods and not on the sale. Mr. Pathak is therefore right in his contention that the fact that the substance produced by them (the manufacturer) at an intermediate stage is not put in the market will not make any difference. If, from the raw material, has been brought into existence a new substance by the application of processes one or more of which are with the aid of power and that substance is the same as `refined oil' as known to the market, an excise duty may be leviable under Item 23." 12. According to Mr. Chengalvarayan, there is nothing in Tariff Item 14AA(1) to indicate that sodium bichromate would attract excise levy only in its crystalline form and not in its liquor form. He points out that in the same item bleaching paste and bleaching powder have been made excisable and therefore, it is not the shape or form of the excisabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sodium bichromate while sodium bichromate crystal will be another form. On that score, the petitioner cannot be heard to say that sodium bichromate liquor will not attract excise levy and only sodium bichromate crystals will attract levy. In the instant case, we have further proof that sodium bichrotmate liquor has been offered for sale in that form itself and a portion of sodium bichromate liquor is also further processed into sodium bichromate crystals and sold as such in the market. Taking note of these factors. The petitioner's contention that no excise duty is leviable on sodium bichromate liquor cannot be accepted and such a plea has to fail. 15. Taking up the second contention of the petitioner, the argument is that the demand for the differential duty can be made only by resort to Rule 10 of the Rules. This plea contains a fallacy in it. As already stated, the procedure, to be followed is the self removal procedure. In accordance with that procedure the petitioner furnishes a return giving therein the cost particulars relating to previous years, hence, it is always open to the Department to re-fix the excise duty in the light of intelligence acquired by it about the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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