V.P. Gulati, Member (T)

1. These appeals are against the orders of Collector of Central Excise, Hyderabad. The point involved in these appeals is classification of ANFO. This product is formed by mixing ammonium nitrate of explosive grade with small quantities of fuel oil and is used for the purpose of the blasting the rocks.

2. The learned Advocate for the appellants, Shri D.N. Mehta, stated that he is aware that this Tribunal in the order No. 103/88, has in the case of Kesoram Cement v. Collector of Central Excise, Hyderabad, held that ANFO was chargeable to duty under Chapter 36 of Central Excise Tariff. He pleaded that he had some fresh arguments to adduce and which were not put forth by the appellants in that case and also stated that in that case, the appellants were more anxious to get MODVAT under Rule 57A of Central Excise Rules. In the opening arguments, he drew our attention to the Write Up on ANFO submitted by the appellants. The said Write Up is annexed to this order as Annexure I.

2A. He reiterated the plea which was taken note of in the case of Kesoram Cement referred to supra that the ANFO was obtained by mixing ammonium nitrate to the fuel oil and this being preparation obtained by simple mixture of two items, could not be considered as a manufacturing process as according to him, merely mixing of two items is not a process of manufacture. In this connection, he cited the case of State of Maharashtra v. The Central Provinces Manganese Ore Co. Ltd. (MANU/SC/0417/1976 : AIR 1977 S.C. 879). He pleaded that by mixing of the two items, no other product came into existence.

He pleaded that even if mixing was held to be process of manufacture, the product emerging by the process of mixing could not be considered as goods as the same was not in a marketable form. He pleaded that before the duty could be levied the test of marketability must be satisfied. He cited the case of The Union Carbide India Ltd. v. Union of India and Ors. MANU/SC/0306/1986 : 1986 (24) ELT 169 (S.C.). He pleaded that goods were produced on the site or in the factory for captive consumption and these were not sold in the market.

3. His next leg of argument is that the ANFO as such could not be considered as an explosive. In this connection, he drew our attention to the Section 4(d) of the Explosives Act and pointed out that the term 'explosive' as defined in this does not specifically mention ANFO under it. This definition for convenience of reference is reproduced below -

"Explosive means gunpowder, nitroglycerine, nitroglycol guncotton, dinitro-toluence,tri-nitrotoluence, picric acid, di-nitro-phenol-tri-nitro-resorcinal (styphnic add) cyclo-trimethylene-tri-nitramine, penta-trythritol-tetranttrate, tetryl, nitro-guantdine lead azide, lead styphynate, fulminate of mercury or any other metal, diazo-dinitrophenol, coloured fires or any other substance whether a single chemical compound or a mixture of substance whether solid or liquid or gaseous used or manufactured with a view to produce a practical effect by explosion or pyrotechnic effect; and includes fogsignals, fireworks, fues, rockets, percussion caps, detonators, cartridges, ammunition of all descriptions and every adaptation or preparation of an explosive as defined in this clause."

He pleaded that ANFO was not an explosive but only phlegmatising agent. He was asked to explain the term. He stated that for the purpose of causing an explosion in the rock, a hole is dug and at the bottom of the hole, an explosive material with a detonator embedded in it is placed and this is topped by a layer of ANFO with a layer of sand on top of it and that when the detonator causes the explosion of the explosive at the bottom, the ANFO has the effect of dampening the explosion. It was pointed out to him that the Collector in his order has referred to the Condensed Chemical Dictionary published by Vansotan Renihold Co. and taken note of the fact that ANFO is described as highly explosive and also ammonium