1. This is a revision application to the Government of India, which under Section 35P(2) of the Central Excises and Salt Act, 1944 is to be proceeded with, as if it were an appeal filed before this Tribunal.
2. The appellants produce Chlorine gas through electrolysis of Sodium Chloride in diaphragm cell. The Chlorine so produced is however, not marketable or suitable for use because it contains various hazardous impurities like hydrogeh, oxygen, nitrogen, carbon dioxide, moisture etc. These impurities have to be removed to make the Chlorine fit for use or sale. For this purpose Chlorine is dried and liquefied. In the process of liquefaction, the impurities present in Chlorine go out from the system with sniff gas. Chlorine in the form of liquid is sold in the market. After liquefaction, pure Chlorine is taken into the process tanks wherefrom it is taken through a pipeline to the vaporiser installed within the same Chlorine plant. The vaporiser vaporises the pure Chlorine to dry gaseous form and this gaseous chlorine is then taken (cleared) to the Benzene Hexachloride (Technical) manufacturing Unit located within the Caustic/ Chlorine complex of the appellants' factory for manufacture of 3HC (Technical). BHC (Tech.) is produced by photo chemical reaction of Benzene with Chlorine in gaseous form. It is imperative that only pure Chlorine free from impurities is fed for the photo chemical reaction, otherwise it may cause explosion in the plant.
Such pure chlorine can be obtained only after liquefaction and for this reason chlorine is first liquefied and then vaporised again to make it suitable for use in manufacture of BMC (Technical).
3. Different Tariff Values were fixed at the material time for Chlorine (Liquid) and dry chlorine in gaseous form. The appellants requested the Excise authorities that dry Chlorine in gaseous form used in the manufacture of BHC (Tech.) should be levied duty at the rates applicable o dry chlorine in gaseous form. The authorities informed the appellants that assessment of Chlorine would be done provisionally till final decision in the matter is taken. Later, the Assistant Collector of Central Excise by his letter dated 25-3-1972 informed the appellants that identical products should not have two different values. It will also not be rational to adopt the gaseous rate in respect of internal consumption of dry gaseous chlorine originally stored in liquid form.
The Assistant Collector of Central Excise-decided that the same tariff value as applicable to liquid chlorine shall be applicable to dry gaseous chlorine. In appeal the Appellate Collector of Central Excise by his order dated 12-2-1979 upheld the decision of the Assistant Collector; the appellants then filed revision before the Government of India, which as already pointed out above, stands transferred to this Tribunal to be disposed of as appeal presented before it.
4. On 2nd Feb., 1983, at the date of hearing, Shri P. Sengupta, C.A., Taxation Manager of the appellants represented the appellants and Smt.
Vijay Zutshi, Senior Departmental Representative represented the respondent Collector. They were heard.
5. The Assistant Collector and Appellate Collector of Central Excise have rejected the appellants' claim only on the ground that there cannot be two Tariff Values for the same product. This obviously is not correct because the Notification in question itself fixes different values for Chlorine in liquid and Chlorine in gaseous form and such values are permissible under Sub-section (3) of Section 3 of the Central Excises & Salt Act, 1944.
6. When liquid chlorine changes into dry gaseous chlorine a new product or goods do not come into existence; the goods remain the same. Only the form or state is changed. At the time dry chlorine in gaseous form is removed through pipelines for consumption in factory it is in gaseous form and as the Notification itself fixes different tariff value's for this form it would be just and appropriate that for such chlorine the value so fixed is employed for determination of duty. Any other interpretation would make the notification nugatory and meaningless. On the facts and circumstances obtaining in the case, we do not agree with the lower authorities that identical product could not have different values. As for the chlorine in liquid form sold in the market and removed in liquid form, its assessable value should be fixed as in the case of chlorine in liquid form.
7. We are fortified in the above view by the Explanation to Rule 49 of the Central Excise Rules (which Explanation, by virtue of Section 51 of the Finance Act, 1982, was applicable at the material time), according to which excisable goods which are consumed or utilised in a factory for the manufacture of any other commodity shall be deemed to have been removed from such factory immediately before such consumption or utilisation. There is no doubt that in the present case, the chlorine was in the form of a gas immediately before its utilisation, that is, at the point of time at which it should be deemed to have been removed from the factory. Clearly, the tariff value has to be related to this point of time and consequently it should be the tariff value applicable to the goods in the form they were in at that time, namely, gas.
8. As a result of the aforesaid discussion, the appeal is allowed and the tariff value for chlorine in dry gaseous form as that of liquid chlorine set aside. After necessary calculation and adjustment in the light of this order, consequential refund, if any, should be granted to the appellants within 2 months of communication of this order.