Order Date – 20 September 2023

Parties: Vadilal Gases Limited Vs Commissioner of Central Excise & ST, Vadodara-ii

Facts –

• The Appellant, Vadilal Gases Limited (VGL), was found to be indulged in evasion of Central Excise duty by suppression of fact that they were processing Hydrogen gas by grading it in various grades and clearing the same without payment of duty to M/s. Vadilal Chemicals Limited.
• Further, it was also alleged that the transaction amounts to related party transaction as per provisions of Section 4 of Central Excise Act, 1944 and therefore, the value of goods needs to be guided by Central Excise Rules, and Rule 9 of Central Excise (Valuation) Rules, 2000.
• Several show cause notices were issued, and penalties were imposed treating process of purification, grading and labeling carried out on commercial hydrogen gas should be treated as 'manufacture' of said gas and VGL is the manufacturer of the Purified Hydrogen Gas.

Issue –

• Whether the appellants are liable to excise duty on Purified Hydrogen Gas and whether the transaction amounts to related party transaction?

Order –

• The Tribunal referred to a previous Supreme Court judgment in the appellant’s own case reported in 2017 (346) ELT 161 (SC) whereby The decision of the Tribunal in Goyal Gases (P) Ltd. to the effect that such activity (mixing of gases) did not amount to manufacture has been affirmed by this Court by its order dated 3-4-2000 reported in Commissioner of Central Excise v. Goyal Gases (P) Ltd. - 2000 (119) E.L.T. 5 (S.C.).
• The issue regarding determining whether the related party transaction exist in this case or not, as per Section 4(1) (b) of Central Excise Act, 1944 read with Rule 9 of Central Excise (Valuation) Rules, 2000 and dutiability of the purified/ graded Hydrogen gas has been remanded back to the original adjudicating authority to re-adjudicate the matter as per the Hon’ble Supreme Court decision in the appellant’s own case reported in 2017 (346) ELT 161 (SC).