2001 (12) TMI 367 - AT - Central Excise

Summary

Issues:
Excisability of paste prepared in the factory and consumed captively for pasting of stamps, labels, papers, etc. during the manufacture of matches.

Detailed Analysis:

1. Excisability of Paste:
The dispute in the case revolved around the excisability of the paste prepared in the appellant's factory and consumed internally for pasting purposes during match production. The authorities had imposed duty and penalties on the appellant, considering the paste as excisable. The appellant argued that the paste, being in a crude form with a very short shelf-life, was not marketable, and hence, not subject to excise duty. They presented evidence supporting the non-marketability of the paste, including test reports and expert opinions on its limited shelf-life.

2. Marketability and Excisability Criteria:
The central issue for determination was the marketability of the paste to establish its excisability. The appellants contended that the paste, due to its short shelf-life and immediate consumption upon production, was not a marketable commodity. They referenced circulars and trade notices to support their argument that non-marketable goods are not liable for excise duty. The authorities, however, had ruled that excise duty is applicable upon manufacture, regardless of marketability or shelf-life, a decision contrary to established legal principles.

3. Burden of Proof and Legal Precedents:
The Tribunal highlighted the onus on the Revenue to prove the marketability of a product to subject it to excise duty. The appellants had taken a stance on the non-marketability of the paste, shifting the burden to the Revenue to provide evidence to the contrary. The Tribunal emphasized that for goods to be excisable, they must be capable of being marketed, as per precedents set by the Hon'ble Supreme Court and other judgments. The lack of evidence on record regarding the marketability of the paste led to the decision in favor of the appellant.

4. Decision and Conclusion:
After a thorough analysis of the arguments presented, including the evidence of non-marketability of the paste and the legal principles governing excisability, the Tribunal concluded that the paste being manufactured and consumed internally by the appellants was not excisable. The orders imposing duty and penalties were set aside, and the appeals were allowed in favor of the appellants, granting them consequential relief.

In essence, the judgment centered on the crucial aspect of marketability in determining excisability, emphasizing the need for the Revenue to establish the marketable nature of goods to levy excise duty effectively. The case underscored the significance of legal precedents, burden of proof, and adherence to established principles in excise matters.