BINNY LIMITED MADRAS Vs. SUPERINTENDENT CENTRAL EXCISE GULNDY

JUDGEMENT

(1.) THE petitioner impugns a demand notice relating to the levy of differential duty of excise and prays for a writ ofcertiorarito quash the notice. THE petitioner is the owner of a textile mill known as Buckingham and Carnatic Mill situate in Perambur and its main object is to carry on business of manufacture and sale of textile goods. In the course of the manufacture of textile fabrics the petitioner produces an intermediary product viz., sodium bichromate liquor which is used for captive consumption in the processing of textiles. Sodium bichromate liquor is eventually used for the production of other derivatives known as (8) basic chromium sulphate liquor, (2) basic chrometan, (3) sodium bichromate crystals, (4) chrome oxide green, and (5) chromic acid. Sodium birchromate liquor is not sold or marketed by the petitioner, but is only used for captive consumption, viz., for conversion to basic chromium sulphate liquor for mineral khaki dyeing and for manufacture of basic chrometan for sale as well as conversion to sodium bichromate crystal as necessary for the manufacture of crome oxide green. Under Tariff Item 14AA (l) bichromates of potassium or sodium are liable to excise duty at the rate of 10 per cent.ad valorem. THE item mentioned in the tariff list is sodium bichromate in crystalline form or, in other words, Sodium bichromate crystals and will not refer to sodium bichromate liquor. Sodium bichromate liquor is not the end product, but only an intermediary product and is, unlike sodium bichromate crystals, not a product offered for sale. However, the petitioner as well as the Central Excise authorities had been acting on the mistaken impression that sodium bichromate liquor - produced by the petitioner and used for captive consumption would also fall under Tariff Item 14AA (1) and, on account of that mistake, the Excise authorities had been demanding the petitioner to pay excise duty on the product. Since sodium bichromate liquor is neither 'goods' nor 'excisable goods' within the meaning of Section 3 or Item 14AA (1) of Schedule I of the Central Excises and Salt Act, the respondents are not entitled to demand payment of excise duty either as full payment or as differential payment.

(2.) IN the mistaken impression in which both parties were acting hitherto the petitioner was conforming to the following procedure for payment of duty on sodium bichromate liquor. IN accordance with Rule 173B the petitioner used to file a classification in the prescribed form viz., RT 12, classifying the product as sodium - bichromate and also furnishing the cost of the product. After filing the returns, the petitioner used to clear the product under the self removal procedure permitted under the rules. The respondents used to revise the assessable value of the product at times, alleging that the duty had been levied according to the price furnished for the preceding year and the cost of construction had gone up during the relevant year. On such revisions the respondents would issue a show cause notice calling upon the petitioner to pay the differential duty based upon such revision in the assessable value in accordance with Rule 10 of the Central Excises and Salt Rules. Lately, the petitioner had been paying the differential duty under protest as he was contending that excise duty was not payable on the product. Lastly, the petitioner received two show cause notices dated 2-4-1976 regarding a sum of Rs. 1, 16, 406.60 and another notice dated 30-10-1976 regarding a sum of Rs. 63, 170.80, as representing differential duty between the period 1-4-1974 to 31-3-1976. It was averred in the notices that there was need for revision on account of the cost of construction during the relevant years being more than that of the preceding year on which excise duty had been levied in the first instance. The show cause notices had been issued under Rule 10 of the Central Excise Rules. The petitioner was taking steps to file its objections to the proposed revision. But, in the meanwhile, it received a letter on 20-11-1976, from the first respondent saying that the show cause notices had been withdrawn, but nevertheless, the differential duty demanded should be paid within the stipulated time. According to the petitioner, even if differential duty has to be paid, the procedure adopted by the first respondent is not in accordance with law, because it had been denied an opportunity of putting forth its objections to the revised demand and, on that score also, the demand notice should be quashed. Thus, the petitioner seeks quashing of the demand notice on two grounds, viz., (1) that sodium bichromate liquor is not an excisable item and (2) that, in any event, no demand can be made without the petitioner being given an opportunity to put forth its objections.

(3.) AS regards the first contention of the petitioner, the case of the respondents is that under Tariff Item 14AA(1) sodium bichromate liquor is as much liable to excise duty as sodium bichromate crystals, because it is only one form of the product and no distinction has been made in the tariff levy between different forms of the product. The respondents have also stated that sodium bichromate liquor is an end product by itself, though, for deriving products like sodium bichromate crystal, chromate tan etc. it may form a raw material. The petitioner itself has admitted in its letter dated 17th February 1976, that the difference between sodium bichromate liquor and sodium bichromate crystals is only in terms of concentration. By another letter dated 8-3-1976, the petitioner had conceded that in terms of chemical composition the liquor and crystals are one and the same except in their physical form. The chemical formula has also been given as the same except for the varying content of water. The Central Excise Department had therefore consistently been taking the view that sodium bichromate liquor is also liable to payment of excise duty. The respondents have, therefore, justified the demand and prayed for the dismissal of the petition.