2001 (1) TMI 391 - AT - Central Excise

Summary

Issues:
1. Duty on oxygen captively consumed.
2. Interpretation of Tariff entries regarding oxygen.
3. Marketability of oxygen supplied through pipeline.
4. Scope of show cause notice and principles of natural justice.

Analysis:
1. The case involved a dispute regarding the duty charged on oxygen captively consumed by the appellants. The appellants converted atmospheric air into oxygen, which was then taken by pipeline to their Ethylene Oxide Plant. The issue of marketability was raised after a writ petition in the Delhi High Court, where the court directed the appellants to raise the issue before appropriate authorities. The refund claim for duty paid on oxygen was rejected by the Asstt. Collector and upheld by the Commissioner (Appeals) based on the observance that oxygen was capable of being bought and sold.

2. The interpretation of Tariff entries regarding oxygen was crucial. The Tariff entry underwent changes, distinguishing oxygen supplied through pipelines. The appellants argued that the oxygen supplied through the pipeline within the manufacturer's factory was not marketable. However, the Tribunal held that as long as the oxygen moved through a pipeline to a different point from its origin, it fell under the relevant Tariff entry.

3. The main argument revolved around the marketability of oxygen supplied through the pipeline. The appellants contended that the oxygen supplied under pressure was not marketable, citing purity requirements and compression specifications. The Commissioner (Appeals) considered instances of oxygen supplied by other manufacturers through pipelines to establish marketability. The Tribunal rejected the argument, upholding the Commissioner's decision that the oxygen supplied through the pipeline was indeed marketable.

4. The scope of the show cause notice and principles of natural justice were also discussed. The Commissioner's consideration of oxygen supplied by other manufacturers through pipelines was challenged as exceeding the show cause notice's scope and violating natural justice. However, the Tribunal found that the Commissioner's knowledge of such practices in similar circumstances was valid in arriving at the decision. The Tribunal dismissed the appeal, upholding the decision on the marketability of oxygen carried through the pipeline.