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TMI Blog2019 (11) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... where the statutory authority is seen transgressing the limits of its jurisdiction while issuing a show cause notice. The contention of the Learned Senior Counsel for the petitioner being that the show cause notice is issued without jurisdiction, the matter needs to be examined in that light. In the instant case, the final product manufactured by the petitioner company being beer, which is an alcoholic liquor for human consumption, the manufacturing process cannot be seen as coming under the purview of the Central Excise Act. The levy of Central Excise duty is not attracted in such cases, where a by-product emerges in the course of manufacture of non-excisable products and the captive consumption of the said byproduct is only intended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xide, which is an excisable commodity, is generated as a by-product and the petitioner admittedly uses the said carbon dioxide in the further manufacturing process to produce alcoholic liquor for human consumption (beer). A reference is made to Notification No. 67/95-C.E., dated 16-3-1995, which provides for an exemption from Central Excise duty on excisable goods produced in a factory of a manufacturer, when the same is captively consumed in the same unit for manufacture of a final product, and it is pointed out that the said Notification clearly states that the benefit of exemption will not be available in cases where the final product manufactured is either exempt from the whole of duty of excise leviable thereon or is chargeable to Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 67/95-C.E., dated 16-3-1995, the respondents would contend that, inasmuch as the petitioner is admittedly not paying any Central Excise duty on the beer manufactured by it, they cannot claim the benefit of exemption from payment of duty on the carbon dioxide captively consumed by them in the manufacture of beer. It is also contended that, at any rate, since there are factual matters that arise for adjudication, the petitioner cannot be permitted to approach this Court under Article 226 of the Constitution of India impugning the show cause notice, and the adjudication of the issue ought to be before the statutory authorities under the Central Excise Act. 4. I have heard Sri Joseph Kodianthara the Learned Senior Counsel duly ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he charging Section. As per the said Section, the levy and collection of Central Excise duty is to be on all excisable goods produced or manufactured in India and at the rates set forth in the Schedule to the Act. Excisable goods are in turn defined under the Act to mean those goods that are specified in the First and Second Schedule to the Central Excise Tariff Act, 1985. The word produced or manufactured in Section 3 of the Act has to be read as in relation to the excisable goods resulting from such processes, and when so read, it would follow that the provisions of the Central Excise Act, including the procedure for levy and collection of duty, would apply only to such production or manufacturing process that result in the production ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the various products that went into the manufacture of a final product, it became possible for a manufacturer to set off any duty paid on a captivelly consumed product in his factory, against the duty paid on the final product that was cleared from his factory. With a view to spare the manufacturer of the requirement of maintaining additional MODVAT/CENVAT records, Notification No. 67/95-C.E., dated 16-3-1995 was published which exempted manufacturers from the requirement of payment of duty on captivelly consumed products so long as they paid duty on the final product that was cleared from their factory premises. This intention can also be gathered from the proviso to the Notification itself, which clearly indicates that if the final pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the carbon dioxide generated, which otherwise would have to be let out from the factory as a waste gas. In my view, the levy of Central Excise duty is not attracted in such cases, where a by-product emerges in the course of manufacture of non-excisable products and the captive consumption of the said byproduct is only intended to efficiently manufacture a non-excisable product. Inasmuch as the final product emerging from the factory of the manufacturer is not excisable (as opposed to exempt or cleared at Nil rate of duty), I am of the view that, Ext. P1 show cause notice has been issued on an erroneous premise and without jurisdiction. The Writ Petition is therefore allowed by quashing Ext. P1 notice as one issued without jurisdiction, wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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