D.C. Mandal, Member (T)

1. By the impugned order the Collector of Central Excise and Customs, Chandigarh confirmed two demands for Central Excise 'duty of Rs. 34,57,955.21 on 8533.138 MT of Bicarbonate of Soda consumed captively during the period from 1 -12-1985 to 28-2-1986 and of Rs. 14,68,528.32 on 3733.099 MT of Bicarbonate of Soda captively consumed during the period from 1-3-1986 to 1-4-1986. The demand show cause notices were issued on 29-5-1986 and 26-9-1986 respectively. In the show cause notices, it was alleged that the appellants manufactured and consumed captively the aforesaid quantities of Bicarbonate of Soda without obtaining a Central Excise licence as required under Rule 174 of the Central Excise Rules, 1944 and without accounting for the same in RG1 register, without completing other Central Excise formalities and without payment of duty and contravened the provisions of Rules 9(1), 52A, 53, 173B, 173C, 173G, 173F and 174 read with Rule 226 ibid. The appellants were asked to explain why the aforesaid Central Excise duty should not be recovered from them under Rule 9(2) ibid and why penalty should not be imposed on them under Rules 9(2), 226 and 173Q of the Central Excise Rules. After considering the replies to the show cause notices and granting personal hearing to the appellants, the Collector of Central Excise held that the contraventions indicated in the show cause notices were established and he confirmed the demands for duty under Rule 9(2) of the Central Excise Rules, 1944. He also imposed penalty of Rs. 1,000/- only on the appellants under Rules 9(2), 173Q and 226 ibid.

2. Collector of Central Excise held that Central Excise Tariff Item 14AA did not lay down the minimum purity to identify goods for the purpose of classification under that Tariff Item. The standard laid down by ISI would not be relevant for classification of Bicarbonate of Soda under the said Tariff Item. He held that what emerged in the process of manufacture of Soda Ash and Ammonium Chloride in their factory was Bicarbonate of Soda which was assessable under Item 14AA of the Central Excise Tariff. Collector also rejected the appellants' contention that Sodium Bicarbonate manufactured by them was not saleable. He observed that no evidence had been led by the appellants to show that it was not saleable. He observed that according to the appellants' claim they utilised Sodium Bicarbonate to make Soda Ash and therefore, it was reasonable to conclude that the product could be purchased by others in order to make soda ash.

3. Arguing for the appellants during the hearing before us, Shri Kapil Sibal, learned Advocate has stated that the appellants had L-4 licence for manufacture of Soda Ash and Ammonium Chloride (a fertilizer). The raw materials for the aforesaid products were Ammonia, Carbon dioxide and salt. In the manufacturing process, Sodium Bicarbonate of 71.40% emerged. The question was as to whether the said Sodium Bicarbonate was excisable or not. He has stated that the composition of Crude Sodium Bicarbonate mixture manufactured by the appellants had been given at page 68 of the Paper Book, which was as follows :-

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He has argued that as per I.S.I, standard purity of Sodium Bicarbonate should be 99% for pure grade, 99.8% for analytical Reagent Grade and 99% for refined Grade. According to him, Bicarbonate of Soda as per Tariff Item 14AA should be of I.S.I. Standard purity. The impugned product is not manufactured by the appellants by refining Crude Sodium Bicarbonate obtained from filter in the Solvay process. This emerge as an intermediate product in the course of manufacture of Soda Ash and Ammonium Chloride. Sodium Bicarbonate of 71.4% purity, as obtained by them as an intermediate product, has no market. Common parlance test should be followed to determine the classification of a product. In support of his arguments, the learned Advocate has relied on the following decisions :-

(i) 1978 ELT (J 121) - Delhi Cloth and General M