D.C. Mandal, Member (T)

1. The main issue to be decided in this appeal is whether Liquid Chlorine and Dry Chlorine are comparable goods and whether assessable value determined for Liquid Chlorine, Under Section 4(1)(a) - Proviso (i) of Central Excises and Salt Act, 1944, should be applied to the Dry Chlorine captively consumed by the appellants in the same factory.

2. The facts of the case, in brief, are that the appellants are manufacturers of Caustic Soda. In the course of manufacturing Caustic Soda Chlorine Gas and Hydrogen Gas are obtained. A portion of the Chlorine gas is burnt with Hydrogen to obtain Hydrochloric Acid and the remaining portion is converted into Liquid Chlorine after drying and compressing and is stored as Liquid Chlorine. A part of Liquid Chlorine is sold as such in specially made cylinders and the balance is captively consumed in the manufacture of Trichloroethylene. The conversion of Liquid Chlorine into Dry Chlorine takes place in the Chlorine Plant itself before Dry Chlorine is cleared for captive consumption. Prior to 1.5.1980 central excise duty was payable on Chlorine Gas falling under Central Excise Tariff Item 14-H on the basis of Tariff Value and separate Tariff values were fixed for Liquid Chlorine and Dry Chlorine. With effect from 1.5.1980 Tariff Value was abolished and Chlorine became assessable on the basis of the value to be determined Under Section 4 of the Central Excises and Salt Act, 1944. The appellants filed a price list seeking approval of the assessable value of Rs. 281.72 per M.T. for Dry Chlorine effective from 1.5.1980. This value was worked out by the appellants on the basis of cost of manufacturing plus manufacturing profit. This price list was provisionally approved by the Assistant Collector of Central Excise after making a minor change in the assessable value by adding a higher margin of profit. Subsequently, after issuing a show cause notice and hearing the appellants, the Asstt. Collector of Central Excise, by his order dated 17.12.1982, fixed the assessable value of Dry Chlorine at Rs. 710 per M.T. with effect from 1.5.1980 and finalised the price-list for the period from 1.5.1980 to 31.3.1983 on that basis and demanded consequential differential duty. The assessable value at Rs. 710/- per M.T. was fixed under the Proviso (i) to Section 4(1)(a) of the Central Excises and Salt Act on the basis of the highest price charged from a class of buyers. The appellants challenged the order of the Asstt. Collector by filing appeal before the Collector of Central Excise (Appeals), but the said appeal was rejected.

3. The following arguments were canvassed before the Collector (Appeals) as it appears from the impugned order :-

(a) Appellants are captively consuming Dry Chlorine Gas and not Liquid Chlorine and, therefore, the assessable value determined for Liquid Chlorine would not be relevant for determining the assessable value of Dry Chlorine captively consumed. The observation of lower authority that Dry Chlorine and Liquid Chlorine are one and the same is erroneous especially when the Department had fixed different tariff values earlier for Liquid Chlorine and Dry Chlorine. Since Government fixed different ariff values for different forms of Chlorine, Liquid Chlorine and Dry Chlorine are not comparable goods;

(b) the assessable value of Dry Chlorine captively consumed should have been determined Under Rule 6(B)(ii) of the Central Excise (Valuation) Rules, 1975 and not Under Rule 6(b)(i) ibid, as has erroneously been done by lower authority;

(c) it was also not correct in law to determine the assessable value of captively consumed Dry Chlorine at the rate of Rs. 710/-per M.T., merely because Liquid Chlorine was sold at that price to a particular class of buyer under Part-II price-list, since this particular transaction was not representative transaction but was a freak sale;

(d) the assessable value, if at all, should have been determined on the basis of the average sale price or