9911796707
TMI Blog1981 (4) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... nd both continuing to produce acetylene black. In one continuous stream naphtha is thermally cracked in furnaces for production of ethylene and its ultimate conversion into low density polyethylene. During the continuous process of cracking of naphtha, several gases including acetylene gas are released. The petitioners have annexed Ex "A" which a flaw chart showing the manufacturing process of acetylene black. 2. "Acetylene gas" was brought under the Central Excise Tariff Item No. 14H (vi) with effect from June 18, 1977 and attracted excise duty at the rate of 12% ad valorem. The ad valorem rates have varied from time to time. The Excise Department classified the acetylene gas obtained in the petitioner's factory under Tariff Item No. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioners was rejected by an order dated May 29, 1979 after the petitioners filed their reply. 4. The petitioners carried two appeals before respondent No. 4 against the orders passed by the 2nd respondent and the 3rd respondent and the copies of which are annexed as Ex. "L" and Ex. "O" to the petition. The respondent No. 4 by his order dated November 6, 1979 dismissed the appeal holding that the acetylene gas manufactured in the process of manufacture of acetylene black was liable to excise duty. The petitioners have thereafter filed the present petition in this Court under Article 226 of the Constitution of India for quashing the orders annexed as Exs. "L", "O" and "R" to the petition and for refund of Rs. 26,53,643.67 being the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the petitioners cannot escape liability by claiming that it was not a marketable commodity unless it underwent a further process of manufacture. In my judgment, the petitioners are entitled to succeed on the first submission urged by Shri Desai and it is not necessary to determine the correctness of the remaining two submissions in the present proceedings. 7. Shri Desai submitted that it is not in dispute that acetylene gas was intermediate product in the continuous, integrated and uninterrupted process of manufacture of acetylene gas. Both the authorities below have recorded a finding to that effect and have also noted that the gas produced in the factory is consumed entirely for captive use. Shri Desai submits that as the acetylene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question whether the vegetable oil manufactured as a component to be converted into a final product as a result of the continuous integrated process of manufacture in a composite mill would be liable to excise duty because there is removal as contemplated by Rule 9 read with Rule 49 of the Central Excise Rules. The Division Bench concluded that where a component is converted into a final product as a result of continuous, integrated process of manufacture, such component would not be liable to excise duty even if such component attract excise duty as an independent manufactured article. The two decisions relied upon by .the learned Counsel entirely support his case. 9. Shri Desai also relied upon the decision of the Delhi High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these decisions were recorded with reference to the rules which were prevalent prior to May, 1968. Shri Sethna urges that Rule 173G of the Central Excise Rules, 1944 was enacted after May, 1968 and that rule deals with payment of duty on the goods consumed within the factory during continuous process. Rule 173G of the Central Excise rules makes reference to the duty due on the goods consumed within the factory in a continuous process. Shri Sethna submits that after the enactment of this rule, the principle laid down in the two earlier Division Bench decisions of this Court would have no application. The submission is not correct. Rule 173G of the Central Excise Rules refers to the duty on the goods consumed within the factory in a continuou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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