P.C. Jain, Member (T)

1. Brief facts of the case are as follows :-

1.1 The appellant is a Public Limited Company having its factory at Naya Nangal in the District of Ropar, Punjab. The appellant was granted an Industrial Licence for the manufacture and marketing of 66,000 tonnes per annum of Soda Ash and 66,000 tonnes per annum of Ammonium Chloride Fertilizer. The commercial production of the two products commenced on 26th January 1985. The appellant claims that he manufactures Soda Ash by employing a sophisticated chemical process, known as 'modified solvay' or 'dual process' which is a modification of Conventional Solvay Process for Soda Ash manufacture. It is further claimed by the appellant he had been regularly filing classification list in respect of Soda Ash and Ammonium Chloride Fertilizer and had been clearing the goods after following the proper procedure and payment of applicable duty. His further claim is that he had furnished to the jurisdictional authorities the complete details of the process of manufacture, the reactions that take place in the process and all other details at the time of furnishing the classification list initially.

1.2 On 29th November 1984, the jurisdictional Inspector of Central Excise Customs wrote a letter to the appellants contending that the appellant manufactures Sodium Bicarbonate at the intermediate stage which is liable to Central excise duty under erstwhile Tariff Item No. 14AA(1); it also contended that since there was no exemption notification in respect of its usage in the manufacture of Soda Ash, Sodium Bicarbonate was liable to duty. Accordingly, the Inspector called upon the appellant to file a classification list of the goods at the intermediate stage and the price list in respect of alleged Sodium Bicarbonate. The Inspector also called upon the appellants to furnish information with regard to the quantity of alleged Sodium Bicarbonate manufactured by them from July 1984 to 30th November 1984.

1.3 Since the commencement of the dispute started with the aforesaid letter dated 29-11-1984 it is appropriate at this stage to set out the relevant extracts therefrom :-

"It is to inform you that sodium bicarbonate manufactured by you at the intermediary stage is liable for Central Excise duty under Tariff Item 14AA(1) as there is no exemption notification in respect of its usage in the manufacture of Soda Ash falling under TI 14A.

2. You are, therefore, requested to file the classification list of the goods at the intermediary stage and the price list in respect of sodium bicarbonate which is being used for captive consumption. The quantity of sodium bicarbonate manufactured by you from 7/84 to 30-11-1984 may please be supplied to this office immediately not later than a week on receipt of this letter."

Beginning with the above letter there has been a protracted correspondence between the appellant and the department. The contention of the appellant has been that the alleged Sodium Bicarbonate arising at the intermediate stage is a mixture of various chemicals containing about 70 to 75% of Sodium Bicarbonate which is not marketable at all as Sodium Bicarbonate. This mixture of chemicals, according to the appellant, cannot be levied to duty as Sodium Bicarbonate in terms of tariff description 14AA(1) because in the absence of any definition of Sodium Bicarbonate in the Central Excise Tariff the goods 'Sodium Bicarbonate' mentioned in the Tariff must be known as such in the market before they are levied to duty whereas the mixture of chemicals allegedly containing Sodium Bicarbonate is not known as Sodium Bicarbonate in the market. In short, the appellant's contention is that the mixture containing Sodium Bicarbonate is not marketable and hence it is not Sodium Bicarbonate and as such cannot be levied to duty under erstwhile Tariff Item 14AA(1).

1.4 In the course of the correspondence, the appellant also submitted vide their letter dated 22-2-1985 (Annexure 'E' to the appeal) that as per