Customs, Excise and Gold Tribunal - Mumbai
Cce vs Mazda Industrial Chemicals Pvt. Ltd. on 13 July, 1999
Equivalent citations: 2000(88)ECR850(TRI.-MUMBAI)
ORDER C.N.B. Nair, Member (T)
1. The respondents are manufacturers of Surface Active Agents falling under Tariff 15AA, before 1.3.1986. They manufacture Surface Active Agent Slurry from Alkyl Benzene and Sulphuric Acid and pay Central Excise duty. Such duty-paid Surface Active Agent Slurry is captively consumed for further processing into wetting out agents and emulsifiers. They availed exemption on these products under Notification No. 101/66 dated 17.2.1966 in terms of serial No. 4 of the table annexed to the notification. The proceedings in these cases relate to eligibility for the exemption.
2. Arguing the appeals for the Revenue, learned S.D.R. Shri H.K. Jain submitted that the respondents had availed this exemption under serial No. 4 of Notification No. 101/66. He submitted that these exemptions were in respect of "emulsifiers, wetting-out agents, softeners and other like products intended for use in any industrial process". He submitted that test reports have shown that the goods in question were only Surface Active Agents and not preparations as envisaged in the notification. He, therefore, submitted that the respondents were not eligible for the exemption. He also submitted that chemical test reports and evidence of Chemical Examiner have shown that the goods continued to be Surface Active Agents even after these processes were carried out by the respondents. Therefore, they could not be given the exemption intended for preparations from Surface Active Agents.
3. Arguing for the respondents, Shri D.B. Shroff, learned Counsel drew our attention to serial No. 4 of the relevant notification which reads as under:
Sl. No. Description Conditions
4. E mulsifiers, wetting out If in respect of surface-active
agents, softeners and other agents used in the manufacture of
like preparations intended such emulsifiers, wetting out
for use in any industrial agents, softeners and other like
prcess preparations the appropriate amount
of the duty of excise or the additional
duty under Section 2A of the Indian
Tariff Act, 1934 (32 of 1934), has
already been paid or where such surface
-active agents are purchased from the
open market on or after the 20th day
of January, 1968.
Shri D.B. Shroff, learned Counsel explained that twenty-four out of twenty-five show cause notices in these appeals proceeded on the basis that the respondents could not have paid duty on the slurry and availed themselves of exemption under Notification No. 101/66 in view of the provisions of Rule 9(3) of the Central Excise Rules, 1944. He submitted that this allegation has no basis at all as the Commissioner (Appeals) has rightly held that if two provisions afford different facilities/concessions, it is up to the assessees to choose between them. Therefore, the choice as to whether they should have availed of the provision for duty free captive consumption under Rule 9 or availed themselves of the exemption under Notification No. 101/66, was entirely for the assessee to make and the adjudication order was in clear error in holding that the respondents should have availed of the facility for duty free captive consumption of the slurry. He also submitted that in the instant case such a choice did not arise at all, inasmuch as the final product, namely, wetting-out agents and emulsifiers in question were exempt and the respondents could not have made use of the provision under Rule 9(3) relating to duty free captive consumption of intermediate products when the final product itself was exempt.
4. Regarding the eligibility of the goods to exemption under serial No. 4 of the notification, Shri Shroff explained that the Surface Active Agents in the slurry form were not suitable for use in all surfaces and, therefore, were required to be subjected to manufacturing processes to make them wetting-out agents and emulsifiers. The slurry is highly acidic and of honey consistency (viscosity) and cannot be used as such as it would damage the cloth, machinery, etc. It is neutralised with caustic soda or alkali and additives are added to make it suitable for end-use. If it is for usage in rubber industry, then urea and ammonium nitrate are added to obtain the required alkality. Thereafter, Hydrochloric Acid and Borax are added. If the use is for insecticide formulation, soda ash, soda bicarbonate, and sodium sulphate are added to the slurry and mixed together. Shri Shroff submitted that in the aforesaid manner slurry is converted into preparations to suit the intended surfaces. He, therefore, submitted that the contention that the slurry continues to be Surface Active Agent and does not become preparation is totally contrary to facts. He also submitted that the Chemical Examiner's report and his replies during cross-examination also do not go against them, inasmuch as the Chemical Examiner has stated during crossexamination that properties such as emulsifying, dispersing and wetting-out are characteristics of all surface active agents and that is the reason why he did not specifically indicate that they are wetting-out agents or emulsifiers. Shri Shroff submitted that there could be no dispute about slurry being subjected to processes for the purpose of making preparations. In fact, annexure A to the show, cause notice dated 30.6.1989 itself mentions that respondents manufacture "Organic Surface Active Agents and preparations and use the slurry captively in the manufacture of Surface Active Preparations."
5. He also submitted that there can be no dispute that the processes carried out by the respondents were in the nature of manufacturing preparations. He referred us to the definition of "preparation" in Shorter Oxford English Dictionary and Webster's Third New International Dictionary wherein "preparation" has been defined as "The action of preparing or condition of being prepared; making or getting ready; things done to make ready for something; the action or process of making something ready for use for service." He also referred us to the decision of the CEGAT in Collector of Central Excise, Bombay v. Sandoz (India) Ltd. wherein the Tribunal accepted that dilution is a process of preparation. Shri Shroff also submitted that the products were being bought and sold is preparations for use in specific industries and sold as wetting-cum-dispersing agents and produced advertisement material describing the goods as "wetting-cum-dispersing agents."
6. We have perused the records and have considered the submissions made by both sides. We find that the respondents are carrying out various processes like adding and mixing the required chemicals for preparing the slurry in question for making them into preparations suitable for use as wetting-out agents. Such preparations were specifically covered by serial No. 4 of the exemption Notification No. 101/66. In the circumstances, there is no justification to hold that these items were not covered by this notification. Therefore, the appeals of the Revenue have no merit and are dismissed.
Pronounced today (13.7.1999).