NIRMA CHEMICAL WORKS Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioners are concerned with five different units all manufacturing detergent powder. This article, detergent powder, is liable to excise duty under Item No. 15AA of the Central Excises and Salt Act, 1944 read with Section 3 of that Act. The petitioners are carrying on manufacturing activity at Vatva in Ahmedabad District, and according to the petitioners, the goods manufactured by the petitioners' firms are exempted from payment of excise duty under notification No. 101/66 dated June 17, 1966. Their further contention is that since the goods are totally exempted from excise duty, by virtue of notification No. 111/78 they are also exempt from taking out a licence for the manufacture of detergent powder. The first respondent herein is the Union of India. The second respondent is the Collector of Central Excise, Baroda Collectorate. The third respondent is the Deputy Collector of Central Excise, Ahmedabad. The third respondent is the Superintendent of Central Excise and the fifth respondent is also the Superintendent of Central Excise. The brief facts of the petitioners' case are that the five concerns of the petitioners which are all located in the vicinity of each other are situated at Vatva. According to them, the petitioners concerned are not using power for the purpose of manufacturing detergent powder. The petitioners' case is that they have been manufacturing detergent powder at the present place of manufacture at Vatva since June 1980. Under notification No. 101/66, detergent powder which falls within the description of 'organic surface active agent' is totally exempt from the whole of the excise duty leviable thereon if in or in relation to the manufacture and packing of such surface active agent no process is ordinarily carried on with the aid of power or of steam for heating. The petitioners submit that their method of manufacturing detergent powder is as follows : - The raw materials used in the manufacture of detergent powder are mainly Alkyd Benzene, Sulphuric Acid and Soda Ash. It may be pointed out that according to the petitioners, what is referred to on record as Olevue Acid is nothing else but highly concentrated sulphuric acid. Some quantity of colour and flavouring agents is also used in the manufacture of detergent powder. The raw materials namely, alkyd benzene, and sulphuric acid are purchased from different dealers in the open market. These raw materials are manufactured by different manufacturers and are duty -paid if duty is required to be paid on the same. Each of these raw materials, alkyd benzene and sulphuric acid, are purchased in bulk in liquid form. Alkyd benzene is imported material and the petitioners have the appropriate licence for importing this particular raw material. The two materials, alkyd benzene and sulphuric acid, are of a hazardous nature and these raw materials are brought to the premises of the petitioners' factories by specially designed motor tankers which are also fitted with compressors for quick and easy delivery. The petitioners' case is that for the purpose of storing the raw materials they have installed huge storage tanks of 300 to 900 tonnes approximately above the ground. Alkyd benzene and sulphuric acid are delivered to the premises of the petitioners in these motor tankers. The compressors on the motor tankers are operated with the aid of the power of the tankers themselves and these compressors are used for the purpose of transferring liquid alkyd benzene or liquid sulphuric acid from the motor tanker to the storage tank of the petitioners. According to the petitioners, these tankers which are fitted with compressors are like fire engines which are also fitted with such devices with a view to pressurise water so that the same can be used for extinguishing fire at great heights. Sulphuric acid or alkyd benzene transported by such tankers is pumped into storage tanks of the petitioners with the help of their own compressors fitted to the tankers. Sometimes, such tankers which bring sulphuric acid or alkyd benzene are not fitted with their own compressors and sometimes, according to the petitioners, compressors fitted to the tankers may not be functioning. In such cases, the petitioners use their own power -driven pumps for the purpose of transferring liquid alkyd benzene or liquid sulphuric acid from the motor tanker to the storage tanks. These electric pumps are fitted near the storage tanks. The function of these electric pumps is merely to facilitate transfer of the liquid from the tanker to the storage tank and according to the petitioners, in all industries where delivery of liquid is obtained from tankers to the storage tank, it is done with the aid of compressors fitted to the tanker or with the aid of electric pumps fitted and kept at the factory taking the deliver, near the storage tank. According to the petitioners, use of electric pumps is only for the purpose of obtaining and storing sulphuric acid or alkyd benzene which are brought in huge quantities by the tankers day in and day out.

(2.) THE petitioners' further case is that the storing of sulphuric acid and alkyd benzene in storage tanks, though within the precincts of factory premises is outside the factory and has no bearing or connection with the manufacturing process.

(3.) THUS , according to the petitioners above the entire process is gone through in their factory, from the stage of obtaining raw materials till the stage of getting the bags packed and detergent powder is available for delivery to purchasers. The grievance of the petitioners is that in July, 1980, an Inspector of the Excise Department had gone to their factory and inspected the factory. Thereafter on 19th December, 1980 a party of officers from the Excise Department came and seized the goods of the petitioners and some of the books and other materials from the factory premises on the ground that these goods were liable to confiscation as excise duty was not paid in respect of these excisable articles. The case of the Department is that these goods are liable to excise duty and since excise duty had not been paid all along, these goods were liable to confiscation and as a step preliminary to confiscation, the goods were seized.