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TMI Blog1999 (7) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals challenge the finding of the first appellate authority. 3. FACTS : Respondents own distilleries producing Ethyl Alcohol of 95% v.v. (also known as rectified spirit/industrial alcohol) and declared their product as non-excisable in their classification lists which were duly approved by the Department. The Department however, issued Show Cause Notices (SCNs) subsequently to them to show cause why the product should not be classified under Chapter Heading 3823 and why excise duty leviable thereon should not be demanded. In adjudication, the Asstt. Collector held that Ethyl Alcohol was classifiable under Chapter Heading 3823 as miscellaneous chemicals not elsewhere specified and confirmed duty demand. The Asstt. Collectors also held that the type of Ethyl Alcohol manufactured by the Respondents was not fit to be used as fuel for spark ignition engine and therefore were not classifiable under Chapter Heading 2204. In appeal, Collector (Appeals), Pune, reversed the adjudication orders of the Asstt. Collectors and held that Ethyl Alcohol was not classifiable under Chapter 38. Hence these Appeals. 4. Ld. JDR, Shri S.K. Das arguing the case of the appellant Collector submits th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Alcohol under Central Excise had remained doubtful. As regards Entry 84, List I, Seventh Schedule to the Constitution and other entries relating to alcohol it was only after the decision of the Supreme Court in the case of Synthetics and Chemicals [1990 (1) SCC 109] on 25-10-1989 holding that industrial alcohol was outside the legislative competence of State Legislature, the constitutional position relating to excisability for purposes of Central Excise became clear. In this connection, our attention had been drawn to the various Section notes and Chapter notes in the Central Excise Tariff Act which further supported the stand taken by the Respondents. First, it was submitted that Chapter 38 covered Miscellaneous Chemical Products . Chapter note 2 of Chapter 38 provided that Heading No. 38.23 included (a) cluster systems (b) fusel oil; Dippel s oil; (c) Ink remover; (d) Stencil correctors other fluids and (e) ceramic firing testers, fusible (e.g. Seger cones) . Ethyl Alcohol was not included in the category of items included in Chapter Heading 38.20 and therefore Ethyl Alcohol was not covered by Chapter Heading 38.23 in terms of Chapter note 2. Further, ex facie, Ethyl Alcoho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the Supreme Court in Synthetics and Chemicals case reported in 1990 (1) SCC holding that Industrial Alcohol was outside the powers of the States for imposing of state excise duty, the Central Excise Tariff Act did not contain a specific entry on Ethyl Alcohol under a specific heading. The Apex Court had also further held that the said ruling will have only prospective application and not retrospective application. Therefore, in our view, although Ethyl Alcohol was considered as an item on which Parliament was competent to levy Excise Duty, before duty can be levied and demanded, it is further necessary to show that the said item is specifically included as an item in the Central Excise Tariff Act, 1985. 7. The question then arises as to which is the Tariff entry under which Ethyl Alcohol becomes an excisable product. As has been explained in the earlier part of this order dealing with the arguments of both sides, Ethyl Alcohol being an Organic Chemical should have normally found a place under Chapter 29. However, by virtue of Chapter note 2(b), Ethyl Alcohol has been specifically excluded. Further, as per Chapter Heading 2204 as it stood before the Finance Bill, 1989, Eth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excise Act, departures, variations and modifications have been made while incorporating the over all scheme of HSN in the Central Excise Act, 1985. The Central Excise Act, being an Act of Parliament has necessarily to follow the larger Constitutional scheme incorporating the Federal structure demarcating areas of legislative competence between the Federal Government and the constituent States. Excise duty on Alcohol having been clearly enumerated under the State list, it was for a very long time considered that even non-potable Alcohol was beyond the competence of the Central Legislature for purposes of levying Central Excise duty. It was only after the Supreme Court decision in Synthetics and Chemicals case in 1989 that the legal position was clearly explained. Industrial Alcohol and non-potable Alcohol therefore became excisable by the Central Legislature. However, even the said ruling (which incidentaly arose not from any levy of Central Excise duty on Industrial alcohol but competence of State Legislature to impose the levy) did not, per se, hold that Industrial alcohol is classifiable under a particular heading under the Central Excise Tariff Act. The effect of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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