1994 (10) TMI 153 - AT - Central Excise

Issues Involved:
1. Request for adjournment.
2. Excisability and classification of acetylene gas.
3. Marketability of impure acetylene gas.
4. Relevance of ISI specifications and purity for classification under Tariff Item 14H.
5. Continuous process of manufacture and its impact on excisability.

Detailed Analysis:

1. Request for Adjournment:
The Respondents requested an adjournment due to the illness of their Executive Director. However, the Tribunal noted that the matter had been adjourned multiple times previously at the request of the appellants, and today's date was fixed considering the convenience of both parties. The Tribunal found the reason insufficient and rejected the request for adjournment, allowing the learned Departmental Representative (D.R.) to proceed with the matter.

2. Excisability and Classification of Acetylene Gas:
The primary issue was the excisability and classification of acetylene gas produced by the appellants and consumed captively in their plant for manufacturing acetylene black. The Assistant Collector initially held that the acetylene gas was impure, explosive, and not capable of being bought and sold, thus not qualifying as "goods" under Tariff Item 14H. The Collector (Appeals) supported this view, stating that the tariff item does not include all gases and lacks evidence of marketability for impure acetylene gas.

3. Marketability of Impure Acetylene Gas:
The Respondents argued that the impure acetylene gas produced in a continuous process was unmarketable and could not be considered goods, citing the Supreme Court judgments in Delhi Cloth & General Mills Co. Ltd. and South Bihar Sugar Mills. They emphasized that the gas was a mixture of different gases and did not conform to commercial nomenclature or ISI specifications. However, the learned D.R. countered that the presence of impurities in minuscule quantities does not change the fact that the product remains acetylene gas, which is recognized commercially and capable of being marketed. The Tribunal agreed with the D.R., noting that technical literature and commercial practice recognize slightly impure acetylene as marketable.

4. Relevance of ISI Specifications and Purity for Classification under Tariff Item 14H:
The Respondents relied heavily on ISI specifications to argue that their acetylene gas was not marketable. The learned D.R. argued that ISI certification is not a regulation of quality but merely a certificate of quality. The Tribunal supported this view, stating that goods can be of various qualities and purity levels and still be marketable. The Tribunal referred to previous orders, including ILAC Limited v. CCE, Bombay, which held that non-conformance to ISI specifications does not imply non-marketability. The Tribunal concluded that purity is not a criterion for classification under Tariff Item 14H.

5. Continuous Process of Manufacture and Its Impact on Excisability:
The Respondents contended that the continuous process of manufacture made the gas non-excisable. The learned D.R. argued that the process of manufacture is immaterial for excisability, citing the Tribunal's order in Verma Industries. The Tribunal agreed, stating that the continuous process does not affect the excisability of the acetylene gas.

Conclusion:
The Tribunal concluded that the acetylene gas produced by the appellants was excisable and classifiable under Tariff Item 14H. The Tribunal found that the gas, despite being slightly impure, was recognized commercially and capable of being marketed. The ISI specifications and purity levels were not determinative for classification. The continuous process of manufacture did not impact the excisability. Consequently, the appeal by the department was allowed, and the acetylene gas was deemed dutiable under Tariff Item 14H.

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