Lean gas from carbon black manufacture is not excisable where it is unmarketable and excluded by binding departmental guidance.

Lean gas or off gas generated in the manufacture of carbon black is not excisable because it was found to be an unmarketable mixture of crude gases and had not reached the RG-1 stage. The carbon monoxide was incinerated as an anti-pollution measure before the remaining gases were released, and the departmental circular on lean gas, stating that such gas need not suffer excise duty, was binding on the revenue.

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Issues: Whether Lean Gas or Off Gas emerging during the manufacture of carbon black is excisable and liable to central excise duty.

Analysis: The gas generated in the manufacture of carbon black was found to be a mixture of crude gases, with carbon monoxide being incinerated as an anti-pollution measure before the remaining gases were released into the atmosphere. The gas was held to be unmarketable and not to have reached the RG-1 stage. The Board's circular on lean gas, which stated that such gas need not be subjected to excise duty, was relied upon, and the revenue could not contend contrary to the binding departmental instructions.

Conclusion: Lean Gas or Off Gas generated in the manufacture of carbon black is not excisable and is not liable to central excise duty.

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