1985 (6) TMI 183 - AT - Central Excise

Summary

Issues:
Classification of cell liquor under Item No. 14-B, CET for central excise duty assessment.

Detailed Analysis:

1. Background and Initial Proceedings:
The appeal originated as a revision application before the Central Government under Section 35-P of the Central Excises and Salt Act, 1944. The case involved M/s. Mettur Chemicals & Industrial Corporation Ltd. seeking permission to clear cell liquor for provisional assessment under Central Excise Rule 9-B. The Department later alleged under-valuation, leading to a series of orders by the Assistant Collector and the Collector of Central Excise, Madras.

2. Collector's Decision and Subsequent Appeal:
The Collector proposed adding a profit margin to the assessable value of cell liquor, based on the profit margin of the relevant year, even though no actual sales took place. The appellants contested this, leading to the Collector's order setting aside the Assistant Collector's decision. Subsequently, the appellants filed a revision application before the Central Government, which was treated as an appeal for disposal.

3. Appellants' Arguments:
The appellants argued that cell liquor was not a product attracting central excise duty, did not fall under Item 14-B of the Central Excise Tariff Schedule for caustic soda, and lacked saleability, thus precluding the addition of a profit margin to its assessable value.

4. Department's Response:
The Department contended that cell liquor, despite not being marketed, was a valuable product that could be converted into caustic soda lye. Citing legal precedents, they argued that saleability was not a determining factor for excise levy, and the profit margin should be considered based on caustic soda sold by the appellants.

5. Tribunal's Decision:
After considering the submissions, the Tribunal focused on whether cell liquor qualified as caustic soda lye under Item No. 14-B, CET. Analysis of technical sources confirmed that cell liquor, with 10-11% caustic soda, did not meet the criteria for caustic soda lye, which contains around 50% caustic soda. Consequently, the Tribunal concluded that cell liquor did not fall under Item No. 14-B, CET, rendering the profit margin addition irrelevant. As the classification of cell liquor was pivotal to the case, the Tribunal allowed the appeal.

In conclusion, the Tribunal's decision hinged on the classification of cell liquor, determining that it did not meet the criteria for caustic soda lye under Item No. 14-B, CET, thereby nullifying the profit margin addition proposed by the Collector. The judgment emphasized technical distinctions and legal interpretations to arrive at the final decision, allowing the appeal in favor of the appellants.