2015 (6) TMI 262 - AT - Central Excise

Levy of duty on bi-product - Manufacture of beer - Whether carbon dioxide which comes into existence in the respondent s unit is marketable and hence, excisable - Held that - Carbon dioxide which is generated during fermentation process would have certain impurities of methane, alcohol, etc. and for making it marketable as carbon dioxide gas, the same would have to be purified for which a separate plant is required. In this case it is not the allegation of the department that there was a separate plant in the respondent s unit for purification of the carbon dioxide. It is a well settled law that marketability of the goods in the form in which the same are cleared for captive use has to be proved. In this case, it is not the allegation of the department that the respondent were purchasing carbon dioxide from other breweries. The carbon dioxide being purchased by the respondent was from carbon dioxide manufacturers and there is merit in the respondent s plea that the carbon dioxide purchased from the carbon dioxide manufacturers is not comparable with the gas which was being produced in their factory. Therefore, just because, the respondent were purchasing carbon dioxide from other suppliers, it cannot be presumed that the carbon dioxide generated in their unit was of the same character and properties as the gas being purchased from outside and hence, would be marketable. - it is the decision of the Tribunal in the case of Mohan Breweries & Distilleries Ltd. (1999 (1) TMI 153 - CEGAT, MADRAS) which would be applicable to the facts of this case. - Decided against Revenue.

Summary

Issues:
1. Whether carbon dioxide generated during fermentation process in the factory is marketable and excisable.

Analysis:
1. The case involved a dispute regarding the marketability and excisability of carbon dioxide generated during the fermentation process in the factory of the respondent, a beer manufacturer. The department contended that the carbon dioxide was marketable as it was used for carbonation of beer and hence attracted central excise duty. The Tribunal referred to previous judgments in similar cases to determine the marketability of the carbon dioxide.

2. The Tribunal considered the arguments presented by both sides. The department argued that the carbon dioxide generated in the factory was of the same character as the one purchased from outside, making it marketable. They also alleged suppression of relevant facts by the appellant. On the other hand, the respondent argued that the carbon dioxide generated in their factory had impurities and required purification for marketability, which was not done in their unit.

3. The Tribunal analyzed the facts and legal precedents. They noted that the carbon dioxide generated during fermentation process contained impurities like methane and alcohol, which needed purification for marketability. Since there was no evidence of a purification plant in the respondent's unit, the marketability of the carbon dioxide was not proven. The Tribunal held that the carbon dioxide purchased from commercial manufacturers differed from that generated in the factory, making it non-marketable without purification.

4. Ultimately, the Tribunal dismissed the Revenue's appeal, upholding the order that the carbon dioxide generated in the factory during fermentation was not marketable and hence not excisable. The cross-objection was also disposed of accordingly. The decision was based on the principle that goods must be proven marketable in the form they are cleared for captive use, which was not established in this case.

This detailed analysis of the judgment highlights the key arguments, legal principles, and the Tribunal's decision regarding the marketability and excisability of carbon dioxide generated during the fermentation process in the factory.