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TMI Blog1991 (2) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... icylic Acid + Acetic Anhydride = Acetyl Salicylic Acid (Aspirin) + Acetic Acid [The chemical formula for Acetic Anhydride is (CH3CO)2 and that for Acetic Acid (CH3 COOH)]. The resultant products are separated by a further chemical process. The appellants had paid duty on the Acetic Acid which was one of the resultant products in the above reaction. Later on, they filed two claims for refund of the duty paid on Acetic Acid during the periods from 1-8-1985 to 2-11-1985 and 3-11-1985 to 10-3-1986. The claims were made on the ground that the duty had already been paid on the input Acetic Anhydride, that there was basically no difference between Acetic Anhydride and Acetic Acid in that the latter was the product of addition of a molecule of water to two molecules of the former resulting in two molecules of the latter and that they would not be separately chargeable to duty since both figured under the same Tariff Item 14AAA in the Schedule. It was further contended that Acetic Acid was a by-product in the manufacture of Aspirin. The Asstt. Collector of Central Excise issued a notice to the appellants on 5-2-1986 asking them to show cause why the claims should not be dismissed for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und in terms of the Asstt. Collector s order. 3. We have heard Shri K. Narasimhan, Advocate, for the appellants and Shri L. Narasimha Murthy, DR, for the respondent-Collector. 4. The learned Counsel for the appellants raised a preliminary objection to the maintainability of the proceedings before the Collector (Appeals). His contention was that the Additional Collector was not empowered to exercise the powers under Section 35E(2) of the Act. These powers could be exercised only by the Collector. However, the Counsel made it clear that in view of the Tribunal s previous decisions to the effect that an Additional Collector could exercise the power of a Collector, he would not be arguing the point. [The reference here appears to be to the Tribunal s decision in S. Kumar Ors. v. Collector of Central Excise Ors. -1983 (13) E.L.T. 1057]. 5. The Counsel then referred to the provisions of sub-section (3) of Section 35A of the Act which reads as follows :- The Collector (Appeals) may, after making such further enquiry as may be necessary, pass such order as he thinks fit confirming, modifying or annulling the decision or order appealed against, or may refer the case back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion. Since the notice did not fulfil the mandatory requirements of law, the proceedings pursuant to the said notice, resulting in the order directing the appellants to refund the amount was also against the provisions of law. 6. Replying to the Counsel s submissions, the learned Departmental Representative submitted that the Collector (Appeals) had observed the principles of natural justice inasmuch as he had forwarded a copy of the Assistant Collector s application which inter alia requested the Collector (Appeals) to pass an order directing the appellants to refund the amount paid to them and offered the appellants an opportunity to file cross-objections, if any. The Collector (Appeals) also heard them in person. If the Collector (Appeals) had formed an opinion that the amount had been erroneously refunded that would have amounted to pre-judging the issue. On the facts and in the circumstances of the case, the notice issued by the office of the Collector (Appeals) should be deemed to have complied with the requirements of the second proviso to sub-section (3) of Section 35A of the Act. 7. We propose to deal with these submissions first. The provisions of sub-section (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t before him, the Collector (Appeals) may exercise the powers contained in the second proviso to Section 35A(3) of the Act. Since the proviso talks of notice to the appellant, it is, in terms, not applicable to the instant case. What, then, if at all, is the course open to the Collector (Appeals) if, in an application (appeal) filed by the Assistant Collector, he comes to the conclusion that duty has not been levied or paid or has been short-levied or short-paid or erroneously refunded? It should be noted that the administrative Collector has a period of one year from the date of the decision or order of the adjudicating authority to make an order directing such authority to apply to the Collector (Appeals) for determination of such points arising out of the decision or order as may be specified by him (the administrative Collector) in his order [see sub-sections (2) and (3) of Section 35E of the Act]. Thereafter the adjudicating authority has a period of three months from the date of communication of the administrative Collector s order to make an application to the Collector (Appeals) [see sub-section (4) of Section 35E] and, according to the same sub-section, the provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: Organic Chemicals, the following, namely :- (1) Acetic Acid 15% ad valorem (2) Acetic Anhydride 15% ad valorem The first thing to be noted is that the Acid and Anhydride are specifically and separately described in the Schedule under different sub-items of Item 14AAA. It is a settled position of law that once an article is described specifically in the Tariff Schedule, no question arises as to whether the process or processes resulting in the emergence of that article would constitute manufacture under Section 2(f) of the Act. However, it is also a settled proposition of law that an article does not become excisable merely because it finds an entry in the Tariff Schedule. It must be shown that it is a marketable article even though the manufacturer may not actually market it, [see Supreme Court s judgment in Bhor Industries Ltd. v. Collector of Central Excise -1989 (40) E.L.T. 280 (SC)]. 10. Now Acetic Anhydride and Acetic Acid are two distinct substances designated by separate and different chemical formulae. Acetic Acid is designated by the formula CHs COOH and Acetic Anhydride by the formula (CH3CO)2 . It is no doubt true that addition of a molecule of water ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 28/85-C.E., dated 17-3-1985 for the purpose of benefit of proforma credit procedure provided in Rule 56A of the Central Excise Rules. This notification is reproduced at page N42 of Volume 19 of 1985 E.L.T. The- period relevant to the present dispute, as noted earlier, runs from 1-8-1985 to 10-3-1986. Therefore, the benefit of the proforma credit of the duty paid on acetic anhydride towards payment of the duty chargeable on acetic acid would be available in terms of the said notification read with Rule 56A. The Counsel submitted that the question of raising the issue of Rule 56A did not arise before the Assistant Collector because the Assistant Collector had allowed the refund of the duty paid on acetic acid. Therefore, when the refund was sought to be recovered, this point was specifically argued before the Collector (Appeals) who, however, did not pronounce on the point. The Learned D.R. submitted that he would leave to the discretion of the Bench the issue of remand of the matter to the Assistant Collector for determining the eligibility for the benefit of Rule 56A. 12. We have considered the above submissions. The notification cited earlier permits the benefit of Rule 56A ..... 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