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TMI Blog1997 (12) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... on or trade nomenclature since the gas manufactured in the instant case is highly impure and explosive. This is amply proved by the certificate of analysis issued by M/s. Essen Co., Analytical chemists Assayers, Bangalore to M/s. TECIL. The gas produced by TECIL is not available to be bought and sold. It is also not capable of being bought and sold. Hence in the light of the definition of goods as given by the Supreme Court in Delhi Cloth Mills case, I find that the Acetylene gas produced in the firm cannot be termed as goods classifiable under T.I. 14H . 2. The jurisdictional Collector caused an application under Sec. 35E(iv) of the CESA, 1944 to be filed against this order. The Collector (Appeals) held that since the gas conformed to the description of acetylene gas under heading 14H(vi) duty was payable thereupon when used for captive consumption. In giving this ruling, he held that the ISI specifications were not material nor was it necessary to determine the marketability of the goods. The assessees approached the Kerala High Court, which set aside the order and directed the Collector to pass fresh orders in accordance with law. The Collector, in de novo consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue. He, however, gave the opinion that in the impure state, the acetylene gas did not fall within the purview of Item 14H CET. Shri Ganesh placed reliance on the Certificate from Essen Co. showing that the sample of acetylene gas contained moisture as well as impurities. He, further, referred to the Tariff Advice 68 of 1981, dated 15-7-1981 (F. No. 105/5/80-CX-III) issued by the CBEC in which the field formations were advised that no impure gas could be covered under T.I. 14H in terms of the judgment of the Supreme Court in the case of South Bihar Sugar Mills. Thereafter, in fact, the jurisdictional officers had advised the assessee vide letter dated 2-9-1981 that such goods were not excisable. He further relied upon the instructions of the Board dated 1-5-1982 (F. No. 202/30/82 CX-VI) which dealt with the amendment to Rules 9 and 49; in which it was held that intermediate products could not be regarded as goods , and, therefore, no duty could be charged when such products were captively consumed. 4. Citing from the text books, the ld. Advocate claimed that the acetylene gas was highly unstable tending strongly to decompose into its constituent elements, namely, carbon and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n impure state, stands established by the certificate of M/s. Essen Co., which has not been contested. In fact, in the earlier order also, the Tribunal had accepted this fact. The extract from Encyclopaedia of Chemical Technology (II Edition) by Kirk Othmer describes the explosive behaviour of acetylene. The paragraphs read as under : Acetylene is an unstable compound with a strong tendency to decompose into its constituent elements, carbon and hydrogen, with the evolution of a considerable amount of heat. Unlike any other industrial gas, acetylene can decompose either slowly or with explosive violence, even in the absence of oxygen, and detonates at pressures as low as 0 to 1 psig. The character, course, and ultimate force of an acetylene decomposition are dependent on a number of factor : the initial pressure and temperature of the acetylene containing system, its size and shape, the amount and nature of diluents such as water vapour or other gases, the itensity of the initiation energy which triggered the decomposition, and the size of the initiation source. The handling of acetylene presents serious complications which are unique of a gas so widely used in industrial appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specially designed tanks after being dissolved in acetone. 13. At this stage, we pointed out to the ld. Advocate that the gas was admittedly being consumed captively by the appellants in the impure state also. His reply was two fold. Relying upon the cited judgment of the Supreme Court in the case of Delhi Cloth General Mills Co. Ltd., the ld. Advocate stated that this judgment follows the ratio of the Moti Laminates judgment in which it was held that the goods which are sought to be taxed must be usable, moveable, saleable and marketable. The impure acetylene gas did not satisfy these conditions. It was his claim that since they were using impure acetylene gas, the resultant product, namely, the acetylene black was also of an inferior grade. We find that the same claim was made before the chemical examiner also when he visited their factory. In his opinion, he had reproduced the claim of the appellant that the acetylene black manufactured from impure acetylene gas, did not meet the specifications of the dry cell manufacturers. The second claim made by Shri Ganesh was that the certificate of analysis shows the presence of toxic compounds such as arsenic. It was his claim that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain quantity of carbon dioxide. 16. The Court further observed that the gas was not known as carbon dioxide to trade. The Supreme Court held that such gas was not the goods and, therefore, not excisable. This judgment has been followed or has been quoted with approval in a number of subsequent judgments including that of Moti Laminates Pvt. Ltd. v. C.C.E. reported in 1995 (76) E.L.T. 241 (S.C.). This judgment was followed by the Supreme Court in their cited judgment in the case of Delhi Cloth General Mills Co. Ltd. The goods involved in this case were calcium carbide used for the manufacture of acetylene gas where the calcium carbide itself was impure in form. In the case before us also what is first manufactured is calcium carbide which is admittedly not of a purity rendering it marketable and is, therefore not subjected to duty by the authorities. When such impure calcium carbide is not excisable, it has to follow that the impure acetylene gas manufactured therefrom cannot be treated on a different footing. The perusal of these three judgments establishes the point of the appellants that the impure acetylene gas manufactured by them is not excisable. 17. On examination ..... X X X X Extracts X X X X X X X X Extracts X X X X
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