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TMI Blog2024 (1) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... ner thought it proper to not to give any reply to the same or to participate in the impugned proceeding and all the legal and factual points in challenging the impugned show cause and adjudication order it has taken in this writ petition, supplementary affidavit, and in course of hearing of the same against the impugned show cause notice and order-in-original could not be taken before the adjudicating authority. The aforesaid impugned ex parte adjudication order dated 30th November, 2017 set aside and matter remanded back to the adjudicating authority concerned to pass fresh adjudication order by allowing the petitioner to file objection against the impugned adjudication order by treating the same as show cause notice and to take all the points raised in this writ petition and supplementary affidavit, the judgments and relevant circulars and notifications petitioner intends to rely in support of its case and after giving opportunity of hearing to the petitioner or its authorised representatives within two weeks from date and final adjudication order shall be passed within four months from the date of receipt of such objection/reply by observing principles of natural justice. Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears at Page 123 of the writ petition wherein it was contended that the said gas is generated during the process of manufacture of Carbon Black and a captive power plant had been set up to avoid the surroundings being polluted from CO contained in the waste gas. It further contended that the said waste gas is neither marketable nor storable nor transportable to other locations and has got no value because it has no alternative use. In the said reply, the petitioner relied on the Circular No. 35/88 dated December 22, 1988 and a judgment rendered by the jurisdictional Tribunal in the case of Philips Carbon Black -Vs- CCE, 111 ELT 835. 6. Petitioner submits that Ministry of Finance, Department of Revenue, issued a Circular wherein it was clearly observed that a mixture of crude gases obtained in the manufacture of Carbon Black and released into the atmosphere after incineration of CO contained need not be subject to duty of excise. 7. On March 29, 2016, respondent concerned issued a show cause notice under Section 11A of the Central Excise Act, 1944 (hereinafter referred to as the Act) primarily on the ground that since the said gas is used in the generation of electricity, which is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plus the value of the same consumed by them. Respondent authority concerned also held that the extended period of limitation is applicable in the facts and circumstances of the case and demanded Central Excise duty amounting to Rs. 20,61,27,457/- and penalty of equal amount. 13. Challenging the impugned order-in-original, petitioner submits that there is no finding in the order-in-original that the said gas satisfies the twin test of manufacture and marketability in order to attract levy under Section 3 read with Section 2 (d) of the Act and that there is no finding that the said gas was manufactured and cleared by the petitioner to attract levy. 14. Petitioner submits that the petitioner is engaged in the manufacture of the said gas. The said gas is not at all dutiable under the Excise Law. The said gas has been arbitrarily classified under the residuary entry being No. 27112900. Petitioner submits that the impugned order is contrary to the binding relevant circulars of CBEC and the extended period of limitation under proviso to Section 11A (1) of the Act could not have been invoked in the facts and circumstances of the present case. 15. Petitioner submits that its objection to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the said definition provides that goods would also include any article, material or substance which is capable of being bought and sold for a consideration and such goods shall be deemed to be marketable. Therefore, the legal fiction is created in the said explanation. The condition precedent for pressing into service the said legal fiction would be to ascertain whether the goods is capable of being bought and sold for a consideration. 21. Petitioner submits that though in the impugned order-in-original, it has been held by respondent authority concerned that lean gas is marketable and therefore, excisable, however, there is no finding that lean gas with CO content is capable of being bought and sold for consideration. 22. Petitioner submits that the said finding that the said gas is marketable, arrived at by the respondent authority concerned is without any material basis since no instance has been cited by respondent authority concerned as to whether the said gas with CO content is capable of being bought and sold in the market for a consideration and therefore, the explanation to Section 2 (d) of the Act as inserted in 2008, does not improve the case of the Revenue. 23. Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt rendered by the Allahabad High Court in the case of Hi-Tech Carbon (supra) and quoted the findings arrived at by the Tribunal. Wherein it was observed that the Tribunal noted that what is generated in the process of manufacture of Carbon Black is waste gas and the petitioner is mandated to use the said waste gas for generating electricity as the said gas cannot be flared into the open air as it would cause pollution. 29. Petitioner submits that the Division Bench of this Court has relied on the judgment rendered by the Supreme Court in the case of DSCL Sugar (supra and it had the occasion to consider the amended definition of excisable goods. 30. Therefore, it is apparent that the said judgment rendered by the Division Bench is now final between the parties since the Revenue has not been able to point out as to whether any further appeal has been carried by the Revenue to the Hon ble Supreme Court against the aforesaid order of the Division Bench of this Court. 31. Petitioner submits that having regard to the facts and circumstances in the case of Philips Carbon Black (supra), the Tribunal in no uncertain terms has held that incineration of lean gas is necessary as release of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also produced as a by product which is further used by the petitioner in manufacture of electricity. The electricity so manufactured is partly used for captive consumption in the plant of the petitioner and a part of it was sold to the West Bengal State Electricity Distribution Company Ltd. and earned a huge amount from the WBSEDCL on commercial basis. Such sale of Electricity can be termed as clearance of dutiable excisable goods and the petitioner is liable to pay the Central Excise duty including cess for the year 2011-12. The off gas or Tail gas is nothing but a mixture of hydrocarbon gases viz, hydrogen gas, Nitrogen gas, Carbon Monoxide gas etc. and as such it is a composite goods and the said gas is falling under Tariff sub-heading No. 27112900 and it has significant energy value or it contains combustible gas components and the said gas can be used as a fuel in an industrial reciprocating, where from the petitioner is manufacturing electricity and earning a huge amount by selling the same commercially. 39. Respondents submit that Excisable goods are defined in Section 2(d) of the Central Excise Act, 1944, which reads as follows:- Goods specified in the first schedule and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the department, nor even did it attend the schedule summons to evade payment of duty. However, the partial figures for electricity sold/supplied to the grid have been submitted only on 29/02/2016 though not for the entire period and without showing the rate per unit sold with supporting documents. Units of electricity consumed within the premises have not been intimated by the petitioner despite requests made. 42. Respondents submit that the petitioner s unit has captive power plant which generate power as shown in col. (2) of the Annexure enclosed to the notice as per petitioner submission dated 29/02/2016. Total generated power has been converted into unit consumed captively plus surplus sold to the grid. 43. Value of electricity has been ascertained on the basis of value of surplus units sold to WBSEDCL @ Rs.3.21 per unit as per para 2.4 of the order of the West Bengal Regulatory Commission in case no. WBERC/PPA-55/11-12 and thereby the petitioner is liable to pay Excise duty plus Education cess amounting to Rs. 20,61,27,457/- together with interest and same amount of penalty. 44. Respondents submit that the details of such irregularities came to light only after scrutiny of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re after incineration of carbon monoxide content need not be subjected to duty of excise. Therefore, the said case is not applicable in the present case. 47. Respondents submit that in the judgment reported in ( 2007) 10 SCC 337 (Continental Foundation Joint Venture holding, Nathpa, H.P. Vs Central Excise, Chandigarh -1) the Hon ble Apex Court held that suppression means failure to disclose full information with intent to evade payment of duly extended period of limitation depend upon suppression of facts. In the present case the petitioner wilfully suppressed the material facts of huge quantity of selling of electricity to the WBSEDCL despite receipt of summon under Section 14 of the Central Excise Act, 1944 with an intention to evade the duty. 48. Respondents further submit that the judgment reported in (1996) 10 SCC 387 (Ranadey Micronutrients Vs Collector of Central Excise) relied upon by the petitioner relating to the classification of micronutrients for the purpose excise duty and the binding effect of the Board s circular and as such the same is not applicable in this case. 49. Respondents submit that in the judgment reported in 2018 (17) GSTL 398 (ALL) (Commissioner of Cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t matter of challenge in this writ petition was impugned show cause notice which culminated into impugned ex-parte final adjudication order which has been passed during pendency of this writ petition and though it appears from record that several opportunities were given to the petitioner to file objection/reply to the impugned show cause notice and for hearing before passing the impugned adjudication order, but since it is the case of the petitioner that it had immediately filed this writ petition against the impugned show cause after receipt of same, petitioner thought it proper to not to give any reply to the same or to participate in the impugned proceeding and all the legal and factual points in challenging the impugned show cause and adjudication order it has taken in this writ petition, supplementary affidavit, and in course of hearing of the same against the impugned show cause notice and order-in-original could not be taken before the adjudicating authority, I am inclined to set aside the aforesaid impugned ex parte adjudication order dated 30th November, 2017 and to remand the matter back to the adjudicating authority concerned to pass fresh adjudication order by allowing ..... 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