TaxTMI 
TaxTMI 
2003 (9) TMI 95
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....mpted. According to the Petitioners, the Nitrogen gas with impurities released into the atmosphere a 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 : (i) By using the fractional distillation method, Liquid Oxygen and Liquid Nitrogen, is obtained in the Air Separation U....
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....ugh the aforesaid processes, is taken to the cylinder filling bench where cylinders, made from durable material are connected to the outlets for filling. Once the cylinders are filled, the main stop valve is closed and the cylinders are removed from the filling bench. During this process also there is a certain loss of gas but that is of extremely negligible quantity. 3.During the period from l7th 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 released into the atmosphere from the gas holders. The Petitioners sent reply to the said show caus....
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....on. 5.Mr. Shroff, learned Counsel appearing for the Petitioners submitted two fold arguments. Firstly, he submitted that the Nitrogen gas discharged from gas holders as a safety measure was not in a marketable condition and hence not excisable. Secondly, the Notification No. 177/87, dated 30-6-87 is clarificatory in nature and, therefore, has retrospective effect. Dealing with the first contention the Counsel submitted that the liquid Nitrogen is highly volatile because of its extremely low temperature. Therefore, certain quantity of liquid nitrogen becomes gaseous Nitrogen in the Air Separation Unit as well as in the liquid storage tanks. This gaseous nitrogen is stored in a gas holder (storage tanks). From the gas holders the nitrogen ....
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....ed. He submitted that representations were made to the Central Government stating that the nitrogen gas released from the gas holders is not marketable commodity and, therefore, no excise duty should be levied on such non-marketable goods. It was submitted that although the exemption notification has been issued on 30th June, 1987 the same should be construed to have retrospective effect so as to cover the period during which the excise duty is sought to be claimed from the Petitioners. 7.In support of his contention, Mr Shroff relied upon the decision of the Apex Court in the case Cadila Laboratories Private Limited v. Commissioner of Central Excise reported in 2003 (152) E.L.T. 262 (S.C.) and submitted that since the Revenue has failed....
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....es (supra) held as follows : - "9. Thus the law is that in order to be excisable, not only goods must be manufactured i.e. some new product brought into existence, but the goods must be marketable. By marketable it does not mean that the goods must be actually bought and sold in the market. But the goods must be capable of being bought or sold in the market. The law also is that goods which are in the crude or unstable form and which require a further processing before they can be marketed, cannot be considered to be marketable goods merely because they fall within the Schedule to the Excise Act." 10.In the present case, the Petitioners are primarily engaged in the manufacture of liquid oxygen. In the process of obtaining liquid oxyge....