DCW LTD Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) The appellant is a manufacturer of Caustic Soda by electrolysis of the brine solution. Hydrogen and Chlorine fumes are released in that process of electrolysis. Those fumes when dissolved in water result in the production of Hydrochloric acid. The appellant thus produces Hydrochloric acid as a byproduct. The industrial licence which the appellant had obtained when it established the manufacturing facility in the year 1962 specified one of the items of manufacture as 100% Hydrochloric acid.

(2.) The appellant commenced manufacture in January 1963. As Hydrochloric acid was exempt from the levy of Central Excise upto 28.2.1979, there was no occasion for the appellant to file any price list for that byproduct till then. It is the case of the appellant and that is also accepted by the Department that almost all of the Hydrochloric acid so manufactured was captively consumed.

(3.) The appellant filed classification list and price list for that 100% Hydrochloric acid on 16.4.1979 and 17.4.1979. Those lists were approved by the appropriate officer after he revised the value to Rs.175 per metric tonne. The price list filed as also the list that was approved mentioned the strength of the acid as 100%. Though the appellant had claimed the cost of production per metric tonne of that concentration as Rs.25.27, the appropriate officer had revised that upward to Rs.175/-, by relying upon the sale which the appellant had effected a short time prior to 1.3.1979 on which date the exemption was withdrawn. On 25.8.1981, the price of Rs.175/- was revised upward to Rs.205/- per metric tonne for the period from 1.3.1979 to 18.6.1980 and to Rs.225/- per metric tonne from 19.6.1980 onwards. Such upward revision was effected by taking into account the price charged by another manufacturer, Mettur Chemicals, which also produced hydrochloric acid. Under Rule 6 (b) (i) of the Central Excise Valuation Rules 1975, it is open to the Department to adopt the price of similar goods sold by other manufacturers in cases where excisable goods are captively consumed by the assessee which manufactures those goods subject to the other conditions referred to in that provision. On 12.11.1981 the appellant accepted the price so revised and paid the amount of duty demanded.