1999 (2) TMI 125 - AT - Central Excise

Summary

Issues Involved:
1. Whether the process of compressing, drying, and filling hydrogen gas into cylinders constitutes "manufacture" u/s Central Excise law.
2. Whether a new commodity has arisen from the process undertaken by the appellants, thereby attracting additional duty liability.

Summary:

Issue 1: Process of Compressing, Drying, and Filling Hydrogen Gas
- The appellants received hydrogen gas through pipelines from Grasim Industries, compressed it, dried it, and filled it into cylinders without paying additional duty.
- The appellants argued that no new commodity was created as the hydrogen gas remained the same, only its form of delivery changed. They cited TH 2804, which does not distinguish between compressed and non-compressed hydrogen gas.
- The adjudicating authority held that the processes of drying and compressing constituted "manufacture" as per Central Excise law, referencing the case of M/s. D.C.W. Ltd. v. Union of India - 1991 (56) E.L.T. 310.

Issue 2: Existence of a New Commodity
- The appellants contended that the hydrogen gas received was already usable for hydrogenation in manufacturing vanaspati, supported by an affidavit from their Manager, which was not rebutted by the adjudicating authority.
- The adjudicating authority's decision was based on the premise that the hydrogen gas needed to be dried and compressed to be commercially viable, thus constituting a new commodity.
- The appellants referenced the Apex Court's ruling in C.C.E v. Steel Strips Ltd. - 1995 (77) E.L.T. 248, emphasizing the burden of proof on the department to show that a new commodity had come into existence.
- The learned JDR argued that hydrogen gas in pipelines was not commercially usable and relied on technical literature, suggesting a remand for further examination of the affidavit.

Judgment:
- The Tribunal observed that the affidavit provided by the appellants, stating the usability of the hydrogen gas for hydrogenation, was not rebutted by the adjudicating authority.
- The Tribunal noted that the Tariff Heading 28.04 did not differentiate between compressed and non-compressed hydrogen gas.
- The Tribunal concluded that no new commodity had come into existence merely by filling hydrogen gas into cylinders.
- Consequently, the impugned order was set aside, and the appeals were allowed with consequential relief to the appellants.