Commissioner of Central Excise Vs. Tanfac Industries Ltd. - Court Judgment

Excerpt:
1. this appeal is filed by the revenue against the order-in-appeal no.69/94-try, dated 25-11-94 passed by the commissioner (appeals) by which the commissioner (appeals) has allowed the appeal of the respondents-assessee with consequential relief by holding that sulphuric acid and anhydrous hydrofluoric acid fall under the same category of goods and since sulphuric acid was upgraded and utilized in the manufacture of anhydrous hydrochloric acid and this anhydrous hydrofluoric acid is cleared subsequently on payment of duty, the exemption under notification no. 217/86 would be available to the sulphuric acid.2. shri c. mani, learned dr appearing for the revenue reiterated the grounds of appeal and argued that the respondents-assessee would not be eligible for refund in terms of rule 173l(3)(iii) of the ce rules, 1944. he has also argued that the term "class" as per websters dictionary is a "group of persons, things, qualities or activities having common characteristics and attributes......" and though sulphuric acid and hydrofluoric acid are inorganic acids, their characteristics are different.3. shri m. venkataraman, learned counsel for the assessee-respondents took me to the findings recorded by the learned commissioner (appeals) from para 4 to 4.2 of the impugned order and submitted that the commissioner (appeals) has extensively dealt with the case and after analysing the whole issue, he has allowed the refund. in this connection he also invited my attention to the judgment of the east zonal bench of cegat, kolkata in the case of titagarh paper mills v.cce. calcutta-iii reported in 2002 (53) rlt 728 by which the bench has held "that the term 'same class' under rule 173l(3)(iii) is of wider connotation and it is not necessary that same type of paper should be manufactured by the appellants from returned paper". similarly in the present case since both the acids are of the same class, therefore, the refund has been rightly granted by the commissioner (appeals).4. i have gone through the findings recorded by the commissioner (appeals) in paras 4 to 4.2 which are extracted below : "4. i have gone through the records of the case carefully including the submissions made in the grounds of appeal as well as during the hearing. i find that under the condensed chemical dictionary, 10th edition, by gessner g. hawley, 'acids' have been grouped as "one of a large class of chemical substances whose water solutions have one or more of the following properitios sour taste, ability to make litmus dye turn red and to cause other indicator dyes to change to characteristic colours, ability to re-act with and dissolve certain metals to form salts, and ability to react with bases or alkalis to form salts. all acids contain hydrogen. in water, ionisation or splitting of the molecule occure, so that some are most of this hydrogen forms h3o+ ions (hydronium ions), usually written more simply as hydrogen ions : hydrofluoric acid, again according to the above dictionary, is hydrogen fluoride in aqueous solution, which will attack glass and any silice containing materials. it is colourless, fuming, mobile, liquid, and derived from distillation from the reaction product of calcium chloride and sulphuric acid. 'sulphuric acid' is described as most widely used industrial chemical having the following properties : viz. strongly corrosive, dense, oily liquid, colourless to dark brown depending on purity. very reactive, dissolves most metals; concentrated acid oxidizes, dehydrates, or sulfonates most organic compound. 4.1 in the background of the above definitions, it will be useful to refer to the decision cited by the appellants reported in 1990 (50) e.l.t. 86 (t), in the case of tata tea ltd. v. cce according to which the term 'class' is defined as a general term for a group with common characteristics or as group of persons or things having some characteristics in common. the other cegat decisions referred to also arrive at more or less the same conclusion as above. therefore, there is no difficulty in holding that sulphuric acid and anhydrous hydrofluoric acid belong to the same class of the goods for the purpose of rule 173l. 4.2 so far as the entitlement to the notification no. 217/86 is concerned, so long as the inputs are manufactured in the factory, and consumed in the manufacture of dutiable final product, exemption under the notification is available. in this case there is no dispute about the fact that the returned sulphuric acid was upgraded and utilised in the manufacture of anhydrous hydrofluoric acid and this anhydrous hydrofluoric acid was cleared subsequently on payment of duty. therefore, he exemption under notification no. 217/86 would definitely be available to the sulphuric acid. in view of the above discussions, the appeal is allowed with consequential relief." i have also gone through the judgment rendered by the east zonal bench of cegat, kolkata in the matter of titagarh paper mills v. cce, calcutta-iii reported in (supra) and i find that the ratio of this judgment is applicable to the present case. therefore, i do not find any infirmity in the order impugned and i sustain the same and reject the revenue appeal. ordered accordingly.

Judgment:
1. This appeal is filed by the Revenue against the Order-in-Appeal No.69/94-TRY, dated 25-11-94 passed by the Commissioner (Appeals) by which the Commissioner (Appeals) has allowed the appeal of the respondents-assessee with consequential relief by holding that Sulphuric Acid and anhydrous hydrofluoric acid fall under the same category of goods and since Sulphuric Acid was upgraded and utilized in the manufacture of anhydrous Hydrochloric Acid and this Anhydrous Hydrofluoric acid is cleared subsequently on payment of duty, the exemption under Notification No. 217/86 would be available to the sulphuric acid.

2. Shri C. Mani, learned DR appearing for the Revenue reiterated the grounds of appeal and argued that the respondents-assessee would not be eligible for refund in terms of Rule 173L(3)(iii) of the CE Rules, 1944. He has also argued that the term "class" as per Websters Dictionary is a "group of persons, things, qualities or activities having common characteristics and attributes......" and though Sulphuric Acid and Hydrofluoric acid are inorganic acids, their characteristics are different.

3. Shri M. Venkataraman, learned Counsel for the assessee-respondents took me to the findings recorded by the learned Commissioner (Appeals) from para 4 to 4.2 of the impugned order and submitted that the Commissioner (Appeals) has extensively dealt with the case and after analysing the whole issue, he has allowed the refund. In this connection he also invited my attention to the judgment of the East Zonal Bench of CEGAT, Kolkata in the case of Titagarh Paper Mills v.CCE. Calcutta-III reported in 2002 (53) RLT 728 by which the Bench has held "that the term 'same class' under Rule 173L(3)(iii) is of wider connotation and it is not necessary that same type of paper should be manufactured by the appellants from returned paper". Similarly in the present case since both the acids are of the same class, therefore, the refund has been rightly granted by the Commissioner (Appeals).

4. I have gone through the findings recorded by the Commissioner (Appeals) in paras 4 to 4.2 which are extracted below : "4. I have gone through the records of the case carefully including the submissions made in the grounds of appeal as well as during the hearing. I find that under the Condensed Chemical Dictionary, 10th Edition, by Gessner G. Hawley, 'acids' have been grouped as "one of a large class of chemical substances whose water solutions have one or more of the following properitios sour taste, ability to make litmus dye turn red and to cause other Indicator dyes to change to characteristic colours, ability to re-act with and dissolve certain metals to form salts, and ability to react with bases or alkalis to form salts. All acids contain hydrogen. In water, ionisation or splitting of the molecule occure, so that some are most of this hydrogen forms H3O+ ions (hydronium ions), usually written more simply as hydrogen ions : Hydrofluoric acid, again according to the above Dictionary, is hydrogen fluoride in aqueous solution, which will attack glass and any silice containing materials. It is colourless, fuming, mobile, liquid, and derived from distillation from the reaction product of calcium chloride and sulphuric acid.

'Sulphuric acid' is described as most widely used industrial chemical having the following properties : viz. strongly corrosive, dense, oily liquid, colourless to dark brown depending on purity.

Very reactive, dissolves most metals; concentrated acid oxidizes, dehydrates, or sulfonates most organic compound.

4.1 In the background of the above definitions, it will be useful to refer to the decision cited by the appellants reported in 1990 (50) E.L.T. 86 (T), in the case of Tata Tea Ltd. v. CCE according to which the term 'class' is defined as a general term for a group with common characteristics or as group of persons or things having some characteristics in common. The other CEGAT decisions referred to also arrive at more or less the same conclusion as above. Therefore, there is no difficulty in holding that Sulphuric acid and anhydrous hydrofluoric acid belong to the same class of the goods for the purpose of Rule 173L.

4.2 So far as the entitlement to the Notification No. 217/86 is concerned, so long as the inputs are manufactured in the factory, and consumed in the manufacture of dutiable final product, exemption under the notification is available. In this case there is no dispute about the fact that the returned sulphuric acid was upgraded and utilised in the manufacture of anhydrous hydrofluoric acid and this anhydrous hydrofluoric acid was cleared subsequently on payment of duty. Therefore, he exemption under Notification No. 217/86 would definitely be available to the sulphuric acid. In view of the above discussions, the appeal is allowed with consequential relief." I have also gone through the judgment rendered by the East Zonal Bench of CEGAT, Kolkata in the matter of Titagarh Paper Mills v. CCE, Calcutta-III reported in (supra) and I find that the ratio of this judgment is applicable to the present case. Therefore, I do not find any infirmity in the order impugned and I sustain the same and reject the Revenue appeal. Ordered accordingly.