2002 (5) TMI 634 - AT - Central Excise

Summary

Issues Involved:
1. Marketability of Benzyl Methyl Salicylate (BMS)
2. Excisability of BMS under the Central Excise Tariff Act, 1985

Issue-wise Detailed Analysis:

1. Marketability of Benzyl Methyl Salicylate (BMS):

The appellants argued that BMS is not marketable because it is not sold nor purchased by any other party. They provided affidavits and letters from bulk drug dealers stating that BMS is sent on a stock transfer basis to their other units and is not marketed. The Assistant Collector initially agreed, finding no evidence of BMS's marketability.

However, the Commissioner (Appeals) found that BMS is listed in the Chemical Weekly Drugs Directory, establishing it as a stable product capable of being manufactured and marketed. The Commissioner emphasized that a marketable commodity does not need to be actually marketed. The fact that BMS is packed and transported to another unit for further manufacturing indicates its marketability. The Commissioner also referred to the Supreme Court's observation in Union Carbide that the capacity of the product to come to the market is what matters, not its actual market presence.

The Tribunal reviewed the evidence and found that the Chemical Weekly Drug Directory's listing of BMS was not reliable. They noted that marketability must be established with concrete evidence, which the department failed to provide. The Tribunal referred to the Supreme Court's decision in CCE v. Steel Strips Ltd., which emphasized the need for the excise authorities to inform the assessee if they intend to rely on authoritative publications.

2. Excisability of BMS under the Central Excise Tariff Act, 1985:

The Assistant Collector initially ruled BMS as non-excisable due to its non-marketability. However, the Commissioner (Appeals) reversed this decision, stating that BMS is a drug intermediate with a specific formulation, packed in containers, and transported for further manufacturing. The Commissioner argued that BMS's packaging and transportation over long distances indicate its marketability and excisability.

The Tribunal considered various Supreme Court decisions, including Indian Cable Co. Ltd., which held that goods must be capable of being bought and sold to be considered excisable. They noted that BMS is packed and ready for dispatch, which supports its marketability. The Tribunal also referred to the Supreme Court's decision in A.P. State Electricity Board, which stated that the availability of purchasers determines marketability, not actual sales.

The Tribunal concluded that BMS is a stable product with a specific chemical composition, capable of being transported and stored for extended periods. They found that the product's characteristics and the fact that it is packed and transported for further manufacturing establish its marketability and excisability.

Separate Judgments:

One member of the Tribunal disagreed with the conclusion, arguing that the department failed to prove BMS's marketability. They emphasized that the burden of proof lies with the department to show that the product is either marketed or marketable. The member cited several Supreme Court decisions, including Union Carbide and Ambalal Sarabhai, which held that marketability is an essential ingredient of excisability. They argued that the department did not provide sufficient evidence to prove BMS's marketability and that the appeal should be allowed.

Final Order:

By majority, it was held that BMS is marketable and therefore liable to excise duty. The appeal was dismissed.