SOUTH BIHAR SUGAR MILLS LTD., ETC versus UNION OF INDIA & ORS.

Citation: [1968] 3 S.C.R. 21 · Decided: 05-02-1968 · Supreme Court of India · Bench: K.N. WANCHOO · Disposal: Appeal(s) allowed

Cited by 14 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

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SOUTH BIHAR SUGAR MILIS LTD., ETC. 
v. 
UNION OF INDIA & ORS. 
February 5, 1968 
[K. N. WANCHOO, C.J., R. S. BACHAWAT, J. M. SHELAT 
AND C. A. VAmIALINGAM, JJ.J 
Central Excise & Salt Act. 1944 Schedule 1. Item 14A-Appellants 
manufacturing mixture of gases containlng carbon dioxide by burning lime-
stone with coke in lime-Using only the carbon dioxide from the mixture 
for refining sugarcane juice and for producing soda ash by solvay ammo-
nia soda process-Whether tire mixture of gases was kiln gas or compress-
ed carbon dioxide covered by Item 14-H. 
The appellant companies manufactured sugar by carbonation process 
and paid excise duty on sugar manufacture(! by them under Item 1 of Sch. 
I to the Central Excise and Salt Act, 1944. According to an affidavit filed 
on behalf of the respondents, these manufacturers employed a process of 
burning lime-stone with coke in a lime kiln with a regulated amount of air 
whereby a mixture of gases was generated consisting of carbon dioxide, 
nitrogen, oxygen and a small quantity of carbon monoxide. The gas thus 
produced was thereafter compressed so as to achieve pressure exceeding 
atmospheric pressure and then passed through a tank containing sugarcane 
juice so as to remove impurities from it and to refine the juice. For this 
process of refining it was only the .carbon dioxide in the gas which was used 
and the other gases i.e. nitrogen, oxygen and carbon monoxide escaped 
into the atmosphere by a vent provided for the· purpose: The carbon 
dioxide r.ontent in this mixture of gases ranged from 27 to 36.5%. Similar-
ly, another company manufactured soda ash by solvay ammonia soda pro-
cess for which also carbon dioxide is required and this was produced by 
the petitioner by burning lime-stone with coke in a kiln in the same man .. 
ner as the appellant sugar manufacturing companies employing the carbon· 
ation process. - The respondents regarded all the companies as manufac-
turers of complressed carbon dioxide and levied excise duty on them under 
Item 14-H in Sch. 1 to the Act. 
The appellants filed writ petitions in the High Court challenging the 
validity of this excise duty but these petitions were dismissed. 
It was contended, inter alia, on behalf of the appellants that the lime 
kiln was maintained. to generate a mixtw"e of gases and not carbon dioxide 
and at no stage in the process of generating this mixture and passing it 
through the sugarcane juice was carbon dioxide-which formed orie of the 
contents of the mixiure-either compressed, liquidified or .solidified. The 
mixture of gases so generated was not carbon dioxide as known to the 
market nor was it according to the specifications laid down by the Indian 
Standards JnstitU1ion which required the carbon dioxide content to be at 
least. 99%. 
Therefore the excise duty sought to be recovered on the 
content of carbon dioxide in the mixture ·of gases could not fall under 
Item 14-H. Furthermore the duty being on goods it could be charged 
only on goods known as carbon dioxide in the trade and marketable as. 
such. 
22 
SUPREME COURT REPORTS 
[1968] 3 S.C.R. 
HELD : The .8'1-! generated by the appellant compani.,. was kiln gas 
.and not. carl;>on dioxtde as known to the trade, i.e., to those who deal in it 
or who use 1t The kiln gas in questioo therefore is neither carbon dioxide 
nor compressed carbon dioxide known as such to ihe commercial commu-
nity and therefore cannot attract Item 14-H in the First &:hedule. 
Ir was not correct to say that because the sugar manufacturer wants 
.carbon dioxide for. °'!fbonation P'!'J?OSCS and sets up a kiln for it that he 
produces carbon d1oxtde alid not lilln gas. In fact what he produces is a 
mixture known both to trade and science as kiln gas one of the oonstituents 
of which is, no doubt, carbon diexide. The kiln gas which is generated 
in th"8C cases is admlttedly never liquified nor solidified and is therefore 
neithtr liquified nor solidified carbon dioxide, assuming that it can be 
mrroed carbon dioxide. 
It cannot be called compressed carbon dioxide 
as un9erstood in the market among those who deal in compressed carbon 
dioxide. Compressed carbon dioxide is understood gene<ally as carbon 
dioxide compressed in cylinders with pressure ranging from 1,000 to 1,800 
lbs. per sq. inch. The mere fact that at one stage or the other kiln gas is 
pressed at 40 to 45 lbs. per sq. inch by a pump or otherwise cannot mean 
that it is comp"'ssed carbo

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