JUDGMENT

1. Heard learned advocates appearing for the parties.

In this writ petition subject matter of challenge is the impugned show cause cum Demand Notice being No. 13/Commr./2016 dated March 28, 2016 and the Order-in-Original being No. 22/COMMR/CGST&CE/HWH/Adjn/2017- 18 dated November 30, 2017 passed during pendency of this writ petition, by way of supplementary affidavit, by the leave of this Court.

Question of law involved in this writ petition is as follows:

(i) Whether lean gas/waste gas containing carbon monoxide which is poisonous gas and being neither marketable nor stable nor transportable to other location and which is generated during the process of manufacture of carbon black, after incineration of the same, in observing pollution laws and to prevent the atmosphere being polluted and not being subjected to excise duty, can be made excisable on the ground that in course of incineration of the said lean gas considerable amount of heat is generated which is used in generation of electricity which is partly for captive consumption and is partly sold?

Facts involve in brief, in the instant case according to the petitioner, are as hereunder:

Petitioner is a manufacturer of “Carbon Black” since March 27, 2009. During the process of manufacture of Carbon Black, a Waste Gas/Off Gas/Tail Gas (hereinafter referred to as the said gas) emerges as a by-product and having regard to the environmental norms and pollution laws, petitioner incinerates the said gas so as to prevent emission of toxic materials, i.e., Carbon Monoxide (hereinafter referred to as CO) and other hydrocarbons. Considerable amount of heat is generated in incinerating the said gas which is used in generation of electricity partly for captive consumption and is partly sold.

A spot memo dated 24th June, 2013 was issued by the Excise Audit Team. At page 9 of the said Spot Memo it was recorded that the said gas can itself be processed and used as a fuel in an industrial reciprocative engine. So, this waste has the marketability and is to be treated as an excisable product.

Petitioner responded to the said Audit Memo by a reply dated March 26, 2014 as appears at Page 123 of the writ petition wherein it was contended that the said gas is generated during the process of manufacture of Carbon Black and a captive power plant had been set up to avoid the surroundings being polluted from CO contained in the waste gas. It further contended that the said waste gas is neither marketable nor storable nor transportable to other locations and has got no value because it has no alternative use. In the said reply, the petitioner relied on the Circular No. 35/88 dated December 22, 1988 and a judgment rendered by the jurisdictional Tribunal in the case of Philips Carbon Black -Vs- CCE, 111 ELT 835.

Petitioner submits that Ministry of Finance, Department of Revenue, issued a Circular wherein it was clearly observed that a mixture of crude gases obtained in the manufacture of Carbon Black and released into the atmosphere after incineration of CO contained need not be subject to duty of excise.

On March 29, 2016, respondent concerned issued a show cause notice under Section 11A of the Central Excise Act, 1944 (hereinafter referred to as the Act) primarily on the ground that since the said gas is used in the generation of electricity, which is subject to Nil rate of duty and non-excisable and/or exempted goods under the Act, the said gas is marketable and therefore, excisable.

Petitioner filed the present writ petition challenging the validity and/or legality of the said show cause notice. During the pendency of the present writ petition, the respondent authority concerned proceeded with the adjudication proceeding in spite of repeated request of the petitioner. The petitioner prayed for repeated adjournments and to keep the proceedings in abeyance till the disposal of the writ petition yet the adjudicating authority passed Order-in- Original, dated November 30, 2