Customs, Excise and Gold Tribunal - Delhi
Collector Of C. Ex. vs M.K.R. Frozen Food Export on 3 July, 1998
Equivalent citations: 1998(61)ECC532, 1998ECR567(TRI.-DELHI), 1998(103)ELT383(TRI-DEL)
ORDER P.C. Jain, Member (T)
1. The two respondents herein are manufacturer of meat and meat products. For preservation of meat they use dry ice i.e. solidified CO2 gas. There is also a Notification No. 7/65-C.E., dated 30th January 1965 which states, that if dry ice is used for industrial purposes it is exempted from duty under the erstwhile Tariff Item 14H. The department observed that dry ice so obtained was used for preservation of meat during transportation from Delhi to Bombay and abroad. It was therefore alleged by the Revenue that the respondents would not be entitled to the benefit of Notification No. 7/65-CE. Consequently, they were asked to show cause as to why a duty of Rs. 3,17,424.15 and Rs. 11,943.75 for the relevant periods be not recovered from them. The aforesaid demands were proposed in show cause notices both dated 24-9-1982.
On adjudication, the aforesaid amounts of duty were dropped by the Addl. Collector.
CBEC in exercise of its powers under Section 35E of the Central Excise Act, 1944 has raised the following points which according to it arise out of the said impugned order passed by the Additional Collector for determination by this Tribunal. These are as follows :-
(i) The Collector has failed to take legal notice of the fact that the notification in question is specific for 'Carbonic Acid' which according to Webster's New World Dictionary refers to a weak, colourless acid formed by solution of carbon dioxide in water whereas the dry ice (used by the party) is referred to as carbon dioxide solidified and compressed into snow-like cakes, used as a refrigerant. In other words, where CQ2 is compressed to high pressure and subsequently so cooled, it condenses into liquid CO2. On releasing the pressure, liquid CO2 solidifies. It is called dry ice because on being warmed it vaporises directly into a gas. The dry ice is, therefore, not the same as carbonic acid. The dry ice remained classifiable under the then T.I. 14H as the entry covered gases including liquified or solidified gases but the exemption notification was only confined to carbonic acid. Therefore, the Notification No. 7/65-C.E., dated 30-1-1965 was not applicable in the instant case.
(ii) Assuming that the notification in question is applicable to dry ice, the Collector failed to take legal notice of the fact that the use of CO2 gas for food preservation in transit or prior to export in trucks/railway wagon could not be considered for industrial use and that, therefore, carbon dioxide used for transportation of meat, would not qualify for exemption under Notification No. 7/65-C.E. ibid.
Hence this appeal of the Revenue before us.
2. Ld. SDR Shri Satnam Singh has reiterated the aforesaid two grounds set out in detail above.
3. We have carefully considered the pleas advanced by the ld. SDR. We have also gone through the appeal memo and the Board's order. We observe that the point No. 1 raised by the CBEC in its order dated 27-3-1992 does not arise out of the impugned order passed by the Addl. Collector. It is a new point taken by the Board. It was not a part of the show cause notice initially issued to the respondents herein. Therefore, this point cannot be raised and cannot therefore be considered by us. As regards the second point, we observe that the Appellants are engaged in manufacturing and selling of meat and meat products. Industrial use does not cease only with the production in the factory. Since this is a business activity undertaken by the respondents they are required to sell their production. Therefore, the activity undertaken by them for the purpose of marketing their products will also be covered by the expression "industrial use" referred to in Notification 7/65-C.E. We are therefore in agreement with the views taken by the adjudicating authority that the respondents herein would be entitled to the benefit of Notification 7/65-C.E. for dry ice used by them for preservation of meat during the course of transportation and sale of the goods manufactured by the appellants. In view of the aforesaid discussion, we do not find any substance in the Revenue's appeal. Hence, we dismiss the same.