TMI Blog2003 (9) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... eased into the atmosphere a safety measure is not a marketable goods and hence is not excisable, even though the Nitrogen gas as such is an excisable item under the Excise Tariff. 2.The Petitioners carry on the business of manufacturing Liquid Oxygen, Liquid Nitrogen and Nitrogen gas. For that purpose, the Petitioners have established fractional distillation plant. According to the Petitioners, the manufacture of liquid Oxygen, Liquid Nitrogen and Nitrogen gas is obtained by the following process : (i) By using the fractional distillation method, Liquid Oxygen and Liquid Nitrogen, is obtained in the Air Separation Unit at a temperature of minus 194 degree centigrade; (ii) The Liquid Nitrogen so separated by the Air Sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n loss of gas but that is of extremely negligible quantity. 3.During the period from l7th June, 1985 to 11th May, 1988, the Petitioners were served with 11 show cause notices covering the period from September, 1984 to 17th January, 1988 thereby demanding an aggregate amount of Rs. 14,31,421.60 as excise duty on the Nitrogen gas which released into the atmosphere from the gas holders. The Petitioners sent reply to the said show cause notices stating therein that the Nitrogen gas released from the gas holder was not a marketable commodity and as such no excise duty was leviable. By an order, dated 1st June, 1992 the Assistant Collector of Central Excise confirmed the demand in respect of the period from September, 1984 to 30th June, 1987 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory in nature and, therefore, has retrospective effect. Dealing with the first contention the Counsel submitted that the liquid Nitrogen is highly volatile because of its extremely low temperature. Therefore, certain quantity of liquid nitrogen becomes gaseous Nitrogen in the Air Separation Unit as well as in the liquid storage tanks. This gaseous nitrogen is stored in a gas holder (storage tanks). From the gas holders the nitrogen gas is taken to a water lubricated gas compressor and is subjected to purification through a purge bottle to remove the impurities in the nitrogen gas. The said nitrogen gas is thereafter passed through Drier Batteries to remove any moisture. The water lubricated compressor and purge operation through the purge b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 30th June, 1987 the same should be construed to have retrospective effect so as to cover the period during which the excise duty is sought to be claimed from the Petitioners. 7.In support of his contention, Mr Shroff relied upon the decision of the Apex Court in the case Cadila Laboratories Private Limited v. Commissioner of Central Excise reported in 2003 (152) E.L.T. 262 (S.C.) and submitted that since the Revenue has failed to discharge the burden of marketability, the orders impugned in the petition are liable to be quashed and set aside. 8.Mr. Desai, learned Counsel appearing on behalf of the Respondents on the other hand supported the orders passed by the authorities below. He submitted that the nitrogen gas is excisable under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pable of being bought or sold in the market. The law also is that goods which are in the crude or unstable form and which require a further processing before they can be marketed, cannot be considered to be marketable goods merely because they fall within the Schedule to the Excise Act." 10.In the present case, the Petitioners are primarily engaged in the manufacture of liquid oxygen. In the process of obtaining liquid oxygen by air distillation process, the Petitioners also obtain liquid nitrogen and nitrogen gas. It is the case of the Petitioners that the nitrogen gas obtained during the air distillation process as well as the nitrogen gas generated from the liquid nitrogen stored in the gas holders are not marketable unless they are su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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