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TMI Blog2022 (12) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... was with regard to carbon dioxide produced in the factory and captively consumed in the course of manufacture of beer. The Kerala High Court observed that carbon dioxide may be an independent product mentioned in the central excise tariff but it was a product that arose in the manufacturing process and would only be seen as an efficient process for manufacture of beer. The High Court, therefore, held that in such a situation central excise duty would not be payable. The order passed by the Commissioner (Appeals) cannot be sustained and is set aside - Appeal allowed. - Excise Appeal No. 52270 of 2018 - FINAL ORDER NO.51122/2022 - Dated:- 22-11-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Kris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod July 2015 to March 2016, carbon dioxide was generated in the appellant factory during the course of manufacture process of beer and it was captively used for manufacture of beer to enhance its taste but excise duty was not paid. Accordingly, a show cause notice dated 04.08.2016 was issued for recovery of Central Excise duty. 5. Shri Krishan Rao assisted by Ms. Aakansha Wadhwani, learned counsel appearing for the appellant has placed reliance upon the judgment of the Kerala High Court in the case of the appellant itself in SABMILLER INDIA LTD. v/s Union of India [ 2019 (367) E.L.T 696 (Kerala) ] to contend that the demand of duty on the carbon dioxide generated during the process of manufacture of beer and captively used could not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, 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/manufacture of excisable goods. In the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture of a final product, it became possible for a manufacturer to set off any duty paid on a captively 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 16.03.1995 was published which exempted manufacturers from the requirement of payment of duty on captively 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 product cleared from the factory of the manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 byproduct 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, with consequential reliefs to the petitioner. (emp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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