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TMI Blog1981 (4) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... product was given up and it was contended by Sri Sorabjee appearing on behalf of the petitioners in one writ petition and Sri K.R. Bhatt, Advocate appearing for the petitioner in the other writ petition that molasses is not a waste product but is the intermediate product during the course of manufacture of sugar from sugarcane and the same is used as raw material for manufacturing alcohol in the petitioners' distillery. It was canvassed before us that molasses is used in captive consumption and in the same compound for manufacture of alcohol in the Distillery and is not removed from the factory and the Collector not having specified the place for storage of molasses, there could not be any levy and collection of duty on molasses in the absence of any such specification, as is required under Rule 9 of the Central Excise Rules. There is thus no removal of molasses from the factory itself as the Distillery is also included in their factory licence and is located in the same compound. The levy and collection of excise duty was without any authority of law and in violation of Rules 9 and 49 of Central Excise Rules. The other pleas raised in the writ petitions were not argued. 2. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not concern itself with the marketability or saleability, consumption or storage and duty being on goods as and where it is manufactured or produced it becomes liable to duty. Molasses thus being a by-product or intermediate to product of sugar it becomes an excisable article. The question that remains for consideration is the point of time and place when this levy is to be made and collected or that if the same is used for captive consumption and used as raw material for manufacture of another goods in the same compound notwithstanding Section 3 of the Act is it free from levy and collection of excise duty. 6. The admitted position is that molasses are intermediate product is stored in tanks from where through the pipelines it goes to the distillery where it is used for preparation of alcohol. There is no integrated continuous process in so far as manufacture of sugar and that of alcohol from molasses is concerned. It is process separately to bring out altogether a new goods known as alcohol. Both the Distilleries are holding separate licences for the said purpose under Central Excises and Salt Act, 1944, without which no Distillery can engage itself in manufacture of alcoho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n benefits any subsequent mention of the words 'under protest' will not mean that the compliance of legal requirement was not a voluntary act. Thus the letters so sent are of no avail and do not help the petitioner. 8. Even otherwise in the State of Uttar Pradesh control of storage, gradation and price of molasses produced by Sugar Factories and the regulation and supply thereof is governed by U.P. Shhera Niyantar Adhiniyam, 1964 and rules framed thereunder. The said Act casts a duty upon the occupier of a factory to provide for safe preservation of molasses though it also provides for covered tanks also. The dimensions of tank are to be recorded in register in Form MF 14, as is required in rules which rules also apply to Distilleries. Provision for emptying tanks before next year or adulteration of old and new molasses obviously within the capacity of tanks so fixed too has been provided. A factory or distillery is thus required to make provision for tanks and the capacity of which is not only to be specified and checked, but is also to be displayed. Thus the specification of tnks for storage of molasses is a legal requirement under the Act with the result that mentioning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the calcium carbide was not marketable commodity as such and was therefore, not goods within the meaning of Section 3 but, could have been used for generation of acetylene gas. In the alternative it was held that even if it was goods then as it was not removed from the factory, in view of the definition of 'factory', as such no duty could be collected. This was a case where the intermediate product was held to be not 'goods' within the meaning of the Act. 13. The next case referred by the learned counsel is Sundershan Lal Chemicals Ltd. v. Union of India - 1979 (4) E.L.T. (J 275). In the said case it was held by the Bombay High Court that the words 'in or outside' occurring in Rule 9 do not qualify the words "shall be removed", on the other hand they go with the words immediately preceding them. Rule 49 does not contain the word 'in' at all. Rule 9, as it stands, without the support of any other rule, does not make an article liable to excise duty if it is removed in a place where it is manufactured". It was a case in which the article in question was a synthetic organic derivative and was used as a base for manufacture of pigments but duty was payable only if it was used pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in this behalf", which words cannot be held to be redundant in view of Rule 49. It was further observed that the place of issue need not necessarily be the same as the place of manufacture as the action of issuing is different from the action of manufacture. It was also observed that it was not correct to say that Rule 47 contemplates levy of excise duty even when the goods are stored within the same premises. But in Oudh Sugar Mills Ltd. v. Union of India -1980 (8) E.L.T. (J 327) (which is between same parties so far as Writ Petition No. 3220 of 1980 is concerned) the Bombay High Court held that place of removal does not mean a part of a composite plant nor it can refer to the storage tank in which oil is collected where it has no independent existence and is a part of the composite plant. The process of manufacture in this case was continuous integrated process and the vegetable oil which was manufactured was a composite part of the final product. The decision in Caltex case (supra) was referred to in support of this distinction. 18. In Manak Lal's case (supra) it was held by the Gujarat High Court that an intermediary, product which is by itself an excisable article is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra); Synthetics and Chemicals Ltd. (supra) and Oudh Sugar Mills (supra) are distinguishable even on the question of fact inasmuch as the intermediate products in those cases were either not goods at all within the meaning of Central Excises and Salt Act or were used for the manufacture of finished goods (and the process was one continuous integrated process) in a plant which was a component of the bigger plant, while in the case before us the intermediate product is not only goods by itself, but it was used as a raw material for manufacture of another goods and the process for manufacturing the same is a discontinuous and disintegrated one. In Delhi Cloth and General Mills' case (supra) which was followed by in some other cases the meaning of the words 'place' or 'premises' have been taken synonymous with the factory and the definition of the factory has been given in wider terms; may be in those cases where there was no site plan showing the existence of separate part of places within a common compound. 23. Thus 'removal', a word used in Rule 9 which word also finds place in Section 4, sub-section (4) (b) of the Central Excises and Salt Act, 1944 means removal of the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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