1988 (11) TMI 212 - AT - Central Excise

Summary

Issues Involved:
1. Liability of Calcium Carbide to Central Excise duty under Item 14AA when used in the manufacture of Acetylene Black.
2. Marketability and classification of Calcium Carbide as "goods" for Central Excise purposes.
3. Applicability of the Carbide of Calcium Rules, 1937 for captive consumption.
4. Relevance of previous judicial decisions on excisability and marketability of intermediate products.

Issue-wise Detailed Analysis:

1. Liability of Calcium Carbide to Central Excise duty under Item 14AA when used in the manufacture of Acetylene Black:
The primary issue was whether Calcium Carbide, manufactured by the appellants and used in the production of Acetylene Black, is subject to Central Excise duty under Item 14AA of the Central Excise Tariff. The process of manufacturing Calcium Carbide was detailed, showing that after seiving, it is either packed for sale or used in the Acetylene Black plant. The Assistant Collector and the Collector (Appeals) both held that Calcium Carbide used captively falls under Tariff Item 14AA, emphasizing that the taxable event is the manufacture, not the marketability.

2. Marketability and classification of Calcium Carbide as "goods" for Central Excise purposes:
The appellants argued that Calcium Carbide used captively is not "goods" as it is not marketable without being packed in air-tight drums, referencing the Supreme Court judgment in Union Carbide India Ltd. v. Union of India (1986). The Tribunal, however, noted that the manufacture of Calcium Carbide is complete after seiving, and it is in a finished form as specified under Tariff Item 14AA. The Tribunal rejected the appellants' contention, distinguishing the facts from the Union Carbide case, where the aluminium cans were not in a finished condition.

3. Applicability of the Carbide of Calcium Rules, 1937 for captive consumption:
The appellants contended that without packing in air-tight drums as per the Carbide of Calcium Rules, 1937, Calcium Carbide is not marketable. The Tribunal disagreed, stating that these rules do not apply to Calcium Carbide consumed captively. The Tribunal found no logic in the argument that captive consumption requires compliance with packing regulations meant for marketable goods.

4. Relevance of previous judicial decisions on excisability and marketability of intermediate products:
The Tribunal referenced several judgments to support its decision. It cited the Supreme Court's decision in J.K. Spinning and Weaving Mills Ltd. v. Union of India, which held that the taxing event for excise duty is the production or manufacture of goods, not their removal. The Tribunal also referred to its own decisions in Ilac Limited and Prabhat Associates, which supported the excisability of intermediate products used captively. The Tribunal concluded that the case of Deccan Sugar, where bagasse was deemed excisable despite being used captively, was analogous to the present case.

Conclusion:
The Tribunal upheld the lower authorities' decision, holding that Calcium Carbide produced and consumed captively by the appellants for manufacturing Acetylene Black is liable to Central Excise duty under Tariff Item 14AA. The appeal was dismissed, reinforcing that goods used for captive consumption are subject to excise levy.