1988 (4) TMI 216 - AT - Central Excise

Summary

Issues Involved:
1. Excisability of Sodium Bicarbonate with less than 99% purity.
2. Applicability of ISI standards for tariff classification.
3. Marketability and saleability of Sodium Bicarbonate.
4. Classification under Central Excise Tariff Item 14AA and Heading 2805.30.
5. Applicability of Central Excise duty on captively consumed goods.
6. Validity of the demand for duty and imposition of penalty under Central Excise Rules.

Detailed Analysis:

1. Excisability of Sodium Bicarbonate with less than 99% purity:
The appellants argued that Sodium Bicarbonate with 71.40% to 74% purity is not excisable as it does not meet the ISI standard of 99% purity. The Tribunal held that purity is immaterial for excisability under Central Excise Tariff Item 14AA and Heading 2805.30. The Tribunal referenced the Supreme Court's decision in Indian Aluminium Cable Limited v. Union of India, which stated that ISI specifications are for quality control and not for tariff classification.

2. Applicability of ISI standards for tariff classification:
The appellants contended that Sodium Bicarbonate should meet ISI standards for classification under Tariff Item 14AA. The Tribunal disagreed, stating that ISI standards are not relevant for tariff classification. The Tribunal cited the Supreme Court's decision in South Bihar Sugar Mills Ltd. v. Union of India, which held that duty of excise is on manufacture, not on sale, and marketability is not a criterion for excisability.

3. Marketability and saleability of Sodium Bicarbonate:
The appellants argued that their Sodium Bicarbonate is not marketable and is consumed captively, hence not liable for excise duty. The Tribunal rejected this argument, referencing multiple judgments, including Binny Limited v. Superintendent, Central Excise, which held that intermediate products used for captive consumption are still excisable. The Tribunal emphasized that marketability is not a determinant for excisability.

4. Classification under Central Excise Tariff Item 14AA and Heading 2805.30:
The Tribunal examined whether Sodium Bicarbonate falls under Tariff Item 14AA and Heading 2805.30. It concluded that Sodium Bicarbonate, irrespective of its purity, is covered by these tariff items. The Tribunal noted that Chapter Note 2(a) of Chapter 28 of the Central Excise Tariff Act, 1985, includes chemically defined compounds with impurities, thus covering the appellants' product.

5. Applicability of Central Excise duty on captively consumed goods:
The Tribunal upheld that captively consumed goods are subject to excise duty, referencing the retrospective amendment of Rules 9 and 49 of the Central Excise Rules by the Finance Act, 1982. The Tribunal cited the case of Dai-ichi Karkaria Private Ltd., where it was held that intermediate products in continuous processes are excisable even if not marketed.

6. Validity of the demand for duty and imposition of penalty under Central Excise Rules:
The Tribunal supported the Collector's decision to demand duty and impose penalties under Rules 9(2), 173Q, and 226 of the Central Excise Rules. The Tribunal found that the appellants deliberately contravened the law by not obtaining a Central Excise license or fulfilling other excise formalities, thus justifying the penalties imposed.

Conclusion:
The Tribunal dismissed the appeal, upholding the Collector's order that Sodium Bicarbonate manufactured by the appellants is excisable under Tariff Item 14AA and Heading 2805.30, irrespective of its purity and marketability. The demand for duty and imposition of penalties were deemed justified.