G. Sankaran, Member (T)

1. The captioned appeal (1) was initially filed as a revision application before the Central Government and the appeal (2) was filed before the Central Board of Excise and Customs. Under Section 35-P of the Central Excises and Salt Act, 1944, these have come as transferred proceedings to this Tribunal for disposal as if they were appeals filed before it.

2. There are several contentions raised before us but the crucial issue falling for determination in both the cases is whether the gas which the appellants call 'fermentation gas' and contains about 99% of carbon dioxide (CO2) falls for classification under item No. 14-H of the First Schedule to the Central Excises and Salt Act, 1944 (CET, for short). The appellants' contention is that the gas in question is not compressed carbon dioxide within the meaning of item 14-H CET, whereas the contention of the Department is that it is.

3. We are concerned in both the appeals with item No. 14-H CET as it stood prior to its amendment by the Finance (No. 2) Act of 1977. The item, at the material time, reads as follows :

"14-H. Compressed, liquefied or solidified gases, the following, namely :

(i) x x x

(ii) x x x

(iii) x x x

(iv) Carbonic acid (carbon dioxide)

(v) x x x

The item was re-worded by the Finance (No. 2) Act of 1977 thus :

"14-H. Gases, including liquefied or solidified gases, the following, namely :-

(i) x x x

(ii) x x x

(iii) x x x

(iv) Carbonic acid (carbon dioxide)

(v) x x x

(vi) x x x

4. Carbon dioxide in gaseous, liquid or solid forms falls under item No. 14-H. However, during the material time, i.e. prior to the amendment of the item in 1977, in so far as the gaseous form was concerned, only compressed carbon dioxide fell for classification under item 14-H. The dispute in the present case revolves round the question : What is Compressed Carbon Dioxide gas?

5. The allegation against M/s. Mohan Meakins Breweries Ltd., Solan was that they had contravened the provisions of Rules 9 and 174 of the Central Excise Rules, 1944 inasmuch as they had manufactured carbon dioxide gas during the years 1973-74 and 1974-75 without obtaining central excise licence and during 1975-76 (upto January 1976) after obtaining central excise licence and that the entire production of CO, gas was consumed by them without payment of the central excise duty leviable thereon. These allegations were set out in a show cause notice dated 5-5-1976 issued by the Supdt. of Central Excise, Chandigarh Range in which the quantity of carbon dioxide was mentioned as 12,862.84 Kgs. and the duly leviable was mentioned as Rs. 15,435.41 (Rs. 12,862.84 basic excise duty plus Rs. 2,572.57 as auxiliary duty). M/s. Mohan Meakins were called upon to show cause to the Assistant Collector of Central Excise. Chandigarh as to why the aforesaid duty should not be demanded from them and why a penalty under Rule 173-Q should not be imposed on them. After nearly 4-1/2 years, the Supdt. of Central Excise, Simla issued a corrigendum dated 29-9-1980 to the show cause notice wherein the quantity of carbon dioxide gas was amended to the figure 3,58,398.67 Kgs. and the duty amount was amended to the figure Rs. 3,58,398.67. Further, the assessee was called upon to show cause to the Collector of Central Excise, Chandigarh. The Collector, after holding adjudication proceedings, by an order dated 4-12-1980 rejected the assessee's contention that the subject CO, was not compressed CO, gas as known to the market compressed it a pressure ranging between 1000 to 1800 pounds per sq. inch and filled in cylinders. He also rejected the contention that since the gas was not removed out of he factory, no liability attached on the assessee for payment of excise duty under "Central Excise Rules 9 and 49. He further rejected the contention that the show cause notice was hit by limitation and that the corrigendum was time-barred. As regards the quantity of C02 gas on which duty was to be paid, the Collector gave certain allowances on accou