RAJIV AND COMPANY Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) M /s. Rajiv and Company have filed the captioned appeal. The appeal is directed against the order of Collector (Appeals). The Collector (Appeals) in the impugned order had held as under :

(2.) THE facts in brief of the case are that M/s. Rajiv and Company are engaged in filling compressed oxygen in cylinder. For this purposes, they received oxygen gas from M/s. National Fertilizers Ltd. On scrutiny of the record of the appellant company, the Central Excise Authorities found that there was no account of 142364.600 CM3 of oxygen gas on which they had taken modvat credit of Rs. 42,709.38 during the period from Jan. 1987 to Jan. 1988. Accordingly, the appellants were asked to show cause as to why the amount of Rs. 42,709.38 should not be recovered from them under Rule 57 -I of the Central Excise Rules, 1944.

(3.) SHRI Amrik Singh, the learned Advocate appearing for the appellants submitted that the gas is manufactured by M/s. National Fertilizers Ltd. The gas was measured when it was passed through a mechanical meter and payment for supply of the gas was made according to the readings of the meter. A blower was installed near mechanical meter. This blower blows the gas through the pipe line from the fertilizer plant to the factory of the appellant at a distance of about 1700 feet. The gas when it passes through mechanical meter is very hot. The temperature is reduced when it passes through 1700 feet long trench. When the gas reaches the factory of the appellant, it is considerably cooled and the gas is collected in a gas holder. It is then sucked by an oxygen compressor and compressed to a pressure of 150 kgs. per C.M. and is filled in gas cylinder. The compressor needs lubrication. The lubrication is done with water. The lubricated water is collected in a purge bottle. The purge bottle needs to be watched as in case it gets filled up completely, it blows up the bottle. Therefore, before purge bottle is filled up completely, its valve fixed at the bottom of the bottle is released. In the process not only water escapes but oxygen gas also escapes and is lost as the valve of the purge bottle is opened every 15 to 20 minutes which causes loss of oxygen gas; that the learned Counsel submitted that the excise duty is payable and charged only on the amount of gas that is filled in the cylinder; that no duty is chargeable for the gas blown out during the process of filling of the cylinders. The learned Counsel submitted that filling of oxygen gas at a pressure of 150 kgs. per CM2 brings into existence a new identifiable and distinct goods; that oxygen gas comes through the pipeline is classifiable under Tariff Item 2804.12 and in cylinders under Tariff Item 2804.11; that this clearly shows that the process of filling of oxygen gas into cylinder is a process of manufacture. In support of his contention, the ld. Counsel cited and relied upon the decision of the Apex Court in the case of C.C.E. v. Rajasthan State Chemicals reported in 1991 (55) E.L.T. 444 and in the case of C.C.E. v. East End Paper Industries reported in 1989 (43) E.L.T. 201. The ld. Counsel cited and relied upon the decision of the Tribunal in the case of Kamath Packaging Pvt. Ltd. reported in 1990 (47) E.L.T. 55 stating that in this case, the Hon'ble Tribunal held that this Tribunal and various High Courts have held that where the legislature intended to provide for the excisability of a product, it has done so by specific mention in the appropriate tariff entries; that in the instant case there was specific entry for oxygen supplied through pipeline and the oxygen gas filled after the compression in gas cylinder and therefore, filling oxygen gas after compressing into gas cylinder should be treated as a process of manufacture. The ld. Counsel also referred to the decision of the Tribunal in the case of jagatjit Industries Ltd. reported in 1991 (54) E.L.T. 380 wherein this Tribunal had held there is no provision to bar remission for loss due to natural causes. The Learned Counsel submitted that loss of oxygen gas is in the process of manufacture of gas in cylinders and therefore, they were entitled to remission of duty on the gas lost in the process of manufacture. The learned Counsel also referred to Sana Metal Containers Pvt. Ltd. reported in 1995 (75) E.L.T. 941 in which the Collector (Appeals) had held that modvat credit on inputs contained only waste and scrap/processing loss is not deniable. The learned Counsel also submitted that the provision of Rule 57D of the Central Excise Rules, 1944 shall be applicable in their case.