(1.) The petitioner is a company engaged in the manufacture of beer. In the Writ Petition, the petitioner impugns Ext.P1 show cause notice dated 05.08.2014 issued by the 2nd respondent Commissioner of Central Excise, Kozhikode, that seeks to demand an amount of Rs. 6,65,308.00 from the petitioner towards Central Excise duty, Education Cess and Secondary Higher Education Cess for the period from July 2009 to Jan. 2014, in respect of the carbon dioxide that was produced in its factory and adaptively consumed in the course of manufacture of beer. The basic premise in the show cause notice is that, during the process of fermentation that is integral to the manufacture of alcoholic liquor, carbon dioxide, which is an excisable commodity, is generated as a byproduct 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 16.03.1995, which provides for an exemption from Central Excise duty on excisable goods produced in a factory of a manufacturer, when the same is captivity 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 rate of duty. It is contended, therefore, that inasmuch as the petitioner does not pay duty on the final product, namely, alcoholic liquor for human consumption, the petitioner must necessarily pay duty on the carbon dioxide at the stage of captive consumption thereof.
(2.) The petitioner has impugned the show cause notice in this Writ Petition without first replying to the same and getting the matter adjudicated before the statutory authorities under the Central Excise Act. The contention raised in the Writ Petition is essentially that, this being a case where the show cause notice has been issued without jurisdiction, the petitioner cannot be relegated to any alternate remedy under the statute.
(3.) A counter affidavit has been filed on behalf of the respondents where the stand taken is that, while it may be a fact that the final product manufactured by the petitioner company is non-excisable, being alcoholic liquor for human consumption, the. carbon dioxide that is generated as a byproduct in the manufacturing process is an independent product mentioned in the Schedule to the Central Excise Tariff Act, and hence, the petitioner cannot escape liability to pay duty on the said product at the stage of captive consumption of the same. A reference is made to Rule 4 of the Central Excise Rules, which clearly stipulates that captive consumption is also deemed to be a removal for the purposes of levy of Central Excise duty. Referring to the provisions of Notification No.67/95-C.E., dated 16.03.1995, 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 adaptively 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 Art. 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.