Per V.P. Gulati:

The issue in the appeal relates to the demand of duty in respect of Carbon Dioxide which had emerged in the appellants' factory as a By-product in the manufacture of Distillery products manufactured by the appellants. The demand is for the period May 1990 - Feb, 1994. The Carbon Dioxide was claimed to be impure Carbon Dioxide collected during the course of fermentation in the appellants factory and the same was on sale supplied through the pipeline to M/s. Agro Carbonic Gases (P) Ltd. (ACGL for short). The same was processed in the factory of M/s. ACGL and thereafter it is stated that the same was cleared on payment of duty at the ACGL's end.

2. The Ld. advocate for the appellants has pleaded that until March, 86, the said gas was not held to be dutiable in terms of tariff advice 83/81 dt. 24.4.81 as stated in the pleas made before the Ld. Lower authority and as stated in the Order-in-Original. He has pleaded that the gas as such was not marketable and unless the marketability could be established the duty could not have been demanded and in this connection he referred to the decision of the Hon'ble Supreme Court reported in 1997 (92) ELT 315. He has pleaded that the goods became marketable as Carbon Dioxide gas only after purification and for that reason therefore, he pleaded that no duty could be charged from the appellants as the product has not been shown to be marketable. He also referred to the judgement reported in 1997 (18) RLT 663 = 1997 (90) ELT 264. He has pleaded that the appellants were in the bonafide belief that no duty was payable in respect of the goods and there was no intention to evade payment of duty. He, in this connection, referred to the SCN wherein it has been merely stated that the appellants who were the manufactures of Industrial Methylated sprit had sold the Carbon Dioxide which was produced in the appellants' factory as by-product without registering themselves with the Central Excise department and without observing any of the Central Excise Procedures and they had contravened the provisions of rules 9 (1), 43, 52A, 53, 173B, 173C, 173G and 174 for having manufactured and cleared Carbon Dioxide without payment of duty and without observing any of the C.E. procedures and suppressed the facts of production and clearance of Carbon Dioxide from the C.E. department with an intent to evade payment of duty and longer period of limitation has been invoked.

3. He has pleaded that there is no attribution as to in what way they had suppressed the production with an intention to evade payment of duty. He has pleaded that the appellants were acting on the bonafide belief that impure Carbon Dioxide could not be treated as marketable and they are not the goods for the purpose of excise levy. In this connection, he referred us to para-9 of the order of the Ld. Lower authority in which the Ld. Lower authority has observed as under :-

"On the question of limitation, I find that manufacture and clearance of impure carbon dioxide and marketing have not been disputed. It has also not been disputed that VCDL had not kept the Department informed about the clearances. That ACGL are registered with the Central Excise is of avail in this regard. Hence, the invocation of proviso to section 11A (1) of the Act is justified."

(before the word "avail" the word "not" appears to be missing otherwise the following sentence will loose its meaning)

4. He has pleaded that the Ld. Lower authority has not disputed the fact that the Carbon Dioxide which was cleared was impure and he has not taken into consideration the appellants' plea as to in what way the appellants had suppressed the facts with the intention to evade payment of duty. He has pleaded that unless this intention could be read from the facts and circumstance of the case, longer period of limitation could not have been invoked. In the absence of any finding in this regard, he pleaded that the Ld. Lower authority's order is not sustainable.

5. He has in this