OBC INDIA LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) DURING the process of manufacturing the marketable nitrogen gas, whether the impure nitrogen gas discharged into atmosphere as a safety measure can be made liable to excise duty is the question raised in this petition. The authorities below have held that since the nitrogen gas is excisable under the Excise Tariff, the petitioners are liable to pay the excise duty till the duty is exempted. According to the petitioners, the nitrogen gas with impurities released into the atmosphere as safety measure is not a marketable goods and hence is not excisable, even though the nitrogen gas as such is an excisable item under the excise tariff.

(2.) THE petitioners carry on the business of manufacturing liquid oxygen, liquid nitrogen and nitrogen gas. For that purpose, the petitioners have established fractional distillation plant. According to the petitioners, the manufacture of liquid oxygen, liquid nitrogen and nitrogen gas is obtained by the following process:

(3.) DURING the period from 17th June, 1985 to 11th May, 1988, the petitioners were served with 11 show cause notices covering the period from september, 1984 to 17th January, 1988 thereby demanding an aggregate amount of Rs. 14,31,421. 60 as excise duty on the nitrogen gas which was released into the atmosphere from the gas holders. The petitioners sent reply to the said show cause notices stating therein that the nitrogen gas released from the gas holder was not a marketable commodity and as such no excise duty was leviable. By an order dated 1st June, 1992, the Assistant Collector of Central Excise confirmed the demand in respect of the period from September, 1984 to 30th June, 1987 and dropped the remaining show cause notices in view of the exemption Notification No. 177 of 1987 dated 30th June, 1987.