Per A.C.C. Unni :

The present appeals arise from Order-in-Original No. 09/Commr/96 dated 29.2.96 passed by the Commissioner of Central Excise, Meerut confirming a duty demand of Rs. 8,59,095.87 against the appellants. A penalty of Rs. 2 lakhs was also imposed apart from redemption fine of Rs. One lakh.

2. We have heard Shri P.K. Sahu, Ld. Advocate for the appellants and Shri H.K. Jain, ld. SDR for the respondents.

3. M/s. Goyal Gases P. Ltd. Sahibabad, one of the appellants before us, is engaged inter alia, in the manufacture of Oxygen gas classifiable under Chapter Sub-Heading 2804.11 ("Oxygen in Cylinder") of the Central Excise Tariff Act, 1985. Appellants claimed that they are also engaged in trading of gases like liquid Nitrogen, Liquid Argon, Hydrogen, Helium, etc. For this purpose, they buy these gases in bulk and repack them in cylinders.

4. By show cause notice dated 6.1.94, the Department alleged that the activity of mixing of various gases into cylinders result in the emergence of a new product leviable to Central Excise duty and since M/s. Goyal Gases Ltd. had undertaken to manufacture such mixtures of gases in their premises and had cleared them in the name of M/s. Peacock Chemical Pvt. Ltd., they had become liable to pay a sum of Rs. 8,59,095.87 representing clearances of 5894 cylinders of mixtures of gases cleared during the period September 90 to May, 1991. The show cause notice also proposed imposition of penalty and confiscation of land, building, plant etc.

5. The matter was adjudicated by the Commissioner of Central Excise, Meerut resulting in the impugned order.

6. Ld. advocate for the appellants contended before us that the Commissioner's finding that mixing of gases by the appellants amounts to manufacture and therefore excisable, cannot be accepted as legally tenable. Ld. Counsel contended that in most of the cases appellants were mixing only inert gases like argon, crypton, helium, neon etc. which do not react chemically with each other. Since these gases prevent reaction their properties remained the same even after mixing are separately identifiable. Packing of various gases with inert gases in cylinders as in the case of appellants, do not amount to manufacture within the definition of Section 2 (f) of the Central Excise Act, 1944. It was contended that various decisions of the Supreme Court, and the Tribunal have laid down the principles and tests to decide whether any particular process amounts to manufacture. He referred to the following cases namely -