Excise duty on vented gases not leviable where Board circular treats atmospheric release as non-clearance.

Gases manufactured in a factory and then vented into the atmosphere were treated, under the applicable Board circular, as not amounting to clearance of a manufactured product and therefore not liable to excise duty. The circular covered gases under Chapters 28 and 29 and was binding on departmental authorities. On the facts noted, the Revenue did not establish receipt of any consideration for the vented quantity, so the demand was inconsistent with the circular and could not be sustained. The appeal was allowed in favour of the assessee.

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Issues: Whether gases manufactured and then vented into the atmosphere within the factory premises were liable to excise duty, and whether the departmental authorities were bound by the Board circular clarifying non-liability.

Analysis: The circular clarified that gases falling under Chapters 28 and 29, when produced in a factory and allowed to escape into the atmosphere, were not to be regarded as manufactured products amounting to clearance and were not liable to duty. The record showed that the gases were vented out and the Revenue did not establish receipt of any consideration for the vented quantity. The impugned demand was therefore inconsistent with the circular, which was binding on the departmental authorities.

Conclusion: The gases vented into the atmosphere were not liable to excise duty, and the demand could not be sustained. The appeal succeeded in favour of the assessee.

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