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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE KANAKRAJ
D.C.W. Limited - Appellant
Versus
Union of India - Respondents
Writ Petition Nos. 8647 of 1988, 12177 and 13838 of 1988
Decided On : 21 February 1991
CENTRAL EXCISE - WET CHLORINE - WHETHER EXCISABLE GOODS - WHETHER MARKETABLE - WHETHER CLASSIFIABLE UNDER SUB-HEADING 2801.10 OF CENTRAL EXCISE TARIFF ACT, 1985 - CENTRAL EXCISES AND SALT ACT, 1944, SECTION 3 - CENTRAL EXCISE TARIFF ACT, 1985, SUB-HEADING 2801.10.
Fact of the Case:
The petitioner, a manufacturer of caustic soda, produced wet chlorine as a byproduct during the process. The wet chlorine was not marketed but was captively consumed for the manufacture of hydrochloric acid. The issue arose whether wet chlorine was excisable goods under Section 3 of the Central Excises and Salt Act, 1944, and whether it was classifiable under sub-heading 2801.10 of the Central Excise Tariff Act, 1985.
Finding of the Court:
The court held that wet chlorine was not excisable goods under Section 3 of the Central Excises and Salt Act, 1944, and was not classifiable under sub-heading 2801.10 of the Central Excise Tariff Act, 1985. The court relied on the following factors: * Wet chlorine did not satisfy the technical meaning of compressed gas, which was the only type of chlorine that could be brought under the relevant tariff item. * Wet chlorine was not marketable in its current form and required further processing before it could be sold. * The government had previously held that wet chlorine was not excisable goods.
Issues: 1. Whether wet chlorine is excisable goods under Section 3 of the Central Excises and Salt Act, 1944? 2. Whether wet chlorine is classifiable under sub-heading 2801.10 of the Central Excise Tariff Act, 1985?
Ratio Decidendi: The court held that wet chlorine was not excisable goods under Section 3 of the Central Excises and Salt Act, 1944, and was not classifiable under sub-heading 2801.10 of the Central Excise Tariff Act, 1985. The court reasoned that wet chlorine did not satisfy the technical meaning of compressed gas, was not marketable in its current form, and had been previously held by the government to be non-excisable.
Final Decision: The court quashed the impugned orders of the revenue authorities and allowed the writ petitions filed by the petitioner.
The petitioner in all the cases is the same. The petitioner-company manufactures caustic soda by electrolysis of sodium chloride brine by BASF type high amperage mercury cells. During this process in the primary cell a mixture of gases consisting of Hydrogen, oxygen, nitrogen water vapour and a substantial percentage of chlorine content are produced. This mixture of gases is fed through pipe line and diverted into two branches. One branch goes to the liquid chlorine plant, with which we are not concerned. The other branch is taken to a furnace where it is burnt with Hydrogen resulting in Hydro chloric acid fumes which are absorbed in water to make commercial grade Hydro chloric acid. The bone of contention between the parties is whether the mixture of gases liberated in the primary and taken through pipe lines for manufacture of Hydrochloric acid, otherwise called wet chlorine, is goods within the meaning of Section 3 of Central Excises and Salt Act, 1944 and whether it is classifiable under sub-heading 2801.10 of the Central Excise Tariff Act, 1985. The subsidiary question is whether in that form, it is marketable even though the petitioner does not actually market it and captively consumes the same for the manufacture of Hydro chloric acid. W.P. 8647 of 1988 concerns the order of the Assistant Collector of Central Excise dated 25-4-1988 imposing a duty of Rs. 8, 00, 839.80 for the total quantity of wet chlorine manufactured and removed without payment of duty for the period from 1-5-1987 to 31-10-1987. W.P. No. 12177 of 1988 is against a similar order dated 8-7-1988 for the period from 1-11-1987 to 30-4-1988 imposing a duty of Rs. 8, 41, 204.44. W.P. No. 13838 of 1988 is against a show cause notice proposing to levy Rs. 8, 20, 421.78 for the period from 1-5-1988 till 30-9-1988. It is not disputed that the petitioner-company has an alternative remedy of filing an appeal under Section 35-A to the Collector of Central Excise (Appeals). Similarly in W.P. No. 13838 of 1988, the petitioner-company can submit its explanation and if an order is passed against it, an appeal can be filed.
2.Let me at the outset deal with the preliminary objection of Mr. A.S. Venkatachala Moorthy, counsel for the respondents. The submission is that this Court should not interfere with the impugned orders on the short ground of availability of adequate alternative remedy. In support of the contention, the following judgments are relied upon: (1)Assistant Collector of Central Excise, Chandran Nagarv. Dunlop India Ltd., 1985 (19) ELT 22, 1985 AIR(SC) 330, 1985 (58) CC 145, 1985 (1) CCC 622, 1985 ECR 4, 1985 (154) ITR 172, 1984 (2) Scale 819, 1985 (1) SCC 260, 1985 (2) SCR 190, 1985 UJ 368, 1984 (2) SCALE 819, 1985 (4) ECC 103, 1985 AIR(SCage) 330, 1985 SCC(Tax) 75), (2)Titaghur Paper Mills Co. Ltd.v. State of Orissa 1983 AIR(SC) 603, 1983 (142) ITR 663, 1983 (53) STC 315, 1983 (1) Scale 437, 1983 (2) SCC 433, 1983 (2) SCR 743, 1983 UJ 503, 1983 (34) CTR 393, 1983 TaxLR 2905, 1971 AIR(Calcutta) 112, 1983 (34) CTR(SC) 393) and S. Jagadeesan v. Ayya Nadar Janaki Animal College & Another 1984 AIR(SC) 1512, 1983 LIC 867, 1983 (2) LLJ 190, 1983 (2) LLN 340, 1983 (1) Scale 721, 1984 (1) SCC 158, 1983 UJ 186, 1983 (1) SLR 776, 1984 SCC(L&S) 98, 1984 SCC(L&S) 98, 1984 SCC(L&S) 98, 1984 SCC(L&S) 98, 1984 SCC(L&S) 98, 1984 SCC(L&S) 98). Reliance is also placed upon the unreported judgments in M/s. Z. Raja Beedi Factoryv. The Collector of Central Excise, Madras-34 (W.A. No. 257 of 1988 dated 2-3-1988), W.A. No. 1730 of 1987 dated 25-10-1988 and M/s. Southern Engineering Industries, Coimbatorev. The Superintendent of Central Excise, Coimbatore I Division, Coimbatore-1991 (52) ELT 373 (Mad.) (W.A. Nos. 865 to 875 of 1989 dated 30-10-1989). The principles are too well known. For more than one reason Courts should not take upon the duty of correcting every illegal order especially when it involves assessment of factual material or technical questions with whic
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