2002 (5) TMI 491 - AT - Central Excise

Issues Involved:
1. Classification of "sugar boiled milk" as "condensed milk."
2. Marketability and packaging of the product.
3. Applicability of excise duty and penalties under specific Central Excise Rules.
4. Relevance of Supreme Court and Tribunal judgments to the case.

Issue-wise Detailed Analysis:

1. Classification of "sugar boiled milk" as "condensed milk":
The primary issue was whether the "sugar boiled milk" cleared by the assessee to their job worker for processing and manufacture of confectioneries could be classified as "condensed milk" under chapter sub-heading 0401.14, which attracts 10% BED ad valorem. The Order-in-Original (OIO) had confirmed this classification, but the Commissioner (Appeals) disagreed, noting that the product was not condensed milk as it did not meet the criteria of being put up in unit containers or being intended for sale. The product still contained 80% moisture and was not standardized or sterilized, lacking the characteristics of commercially standard condensed milk.

2. Marketability and packaging of the product:
The Commissioner (Appeals) found that the product was not marketable as condensed milk because it was not put up in unit containers and was not intended for sale. The product was cleared in empty liquid glucose drums without specific measurements, which did not qualify as unit containers. The Board's Circular No. 11/88 was also referenced, supporting the view that the product was not marketable in its current form. The product's shelf life was only 7 to 10 days, unlike commercial condensed milk, which has a shelf life of four to six months.

3. Applicability of excise duty and penalties under specific Central Excise Rules:
The Commissioner (Appeals) held that the charges of not filing declarations under Rules 173B and 173C and clearing the product without payment of duty were not sustainable. The product did not qualify as condensed milk under the specified tariff heading, thus excise duty was not applicable as per the classification rules. The judgment of the Apex Court in Ujjagar Prints was cited, emphasizing that duty was paid based on job work charges, and the product was not intended for sale as condensed milk.

4. Relevance of Supreme Court and Tribunal judgments to the case:
The Commissioner (Appeals) referred to several judgments, including the Supreme Court's decision in Travancore Electro-Chemical Inds. Ltd. v. CCE, Cochin, which emphasized the need for a product to be marketable to attract excise duty. The judgment in Dhrangadhra Chemical Works Ltd. v. U.O.I. was also considered, highlighting that goods must be marketable or capable of being marketed to be excisable. Additionally, the Tribunal's rulings in Agro Foods Punjab Ltd. and M.P. Vegetable Fruits Products v. CCE were relevant, as they discussed the necessity of products being put up in unit containers and intended for sale to be classified under specific tariff headings. The Allahabad Collectorate Trade Notice No. 38/86 further clarified that products in large containers intended for sale to other manufacturers or dealers do not qualify as unit containers under the tariff heading.

Conclusion:
The appeal was rejected, affirming the Commissioner's (Appeals) decision that the product was not classifiable as condensed milk under chapter sub-heading 0401.14, was not marketable, and did not meet the criteria for excise duty. The product was not intended for sale in unit containers, and the findings were supported by relevant Supreme Court and Tribunal judgments.

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