2006 (9) TMI 42 - AT - Central Excise

Chemical preparation manufactured and captively consumed and shelf life ranging from 2 to 8 weeks - Despite short shelf life, products capable of being marketed not shown by department - Chemical preparation held not excisable

Summary

Issues:
1. Whether the chemical preparations and spent hypo-solutions used in processing cinematographic films are excisable and liable for duty.
2. Validity of the Commissioner's decision in adjudication of the show cause notice dated 31-8-1998.
3. Decision of the jurisdictional Deputy Commissioner in favor of the assessee for another period (April - September 99) and the subsequent appeal filed by the Department.
4. Applicability of the findings in the case of Famous Cine Laboratory and Moti Laminates (P) Ltd. to the present case.

Analysis:

1. The dispute revolved around whether the chemical preparations and spent hypo-solutions used by the respondents in processing cinematographic films were excisable and subject to duty. The department alleged that these products were excisable under specific headings and attracted duty. However, the respondents argued that the chemical preparations were not marketable due to limited shelf-life and hence not excisable. The Commissioner, in adjudication, found in favor of the respondents, holding that the chemical preparations and spent hypo-solutions were not excisable. The Tribunal upheld this decision, emphasizing the lack of evidence of marketability for these products, similar to the findings in the case of Famous Cine Laboratory and Moti Laminates (P) Ltd. The burden of proof was on the department to establish marketability under normal conditions, which they failed to do.

2. The Commissioner's decision in adjudication of the show cause notice dated 31-8-1998 was deemed well-reasoned and justified. The Commissioner's analysis, supported by case law and lack of evidence of marketability, was upheld by the Tribunal. The Tribunal found no grounds for interference in the Commissioner's decision, leading to the dismissal of Appeal No. 1499/2000 challenging the Commissioner's order.

3. Subsequently, the jurisdictional Deputy Commissioner ruled in favor of the assessee for another period (April - September 99) in response to a show cause notice. The Commissioner (Appeals) upheld this decision, rejecting the Department's appeal. The Tribunal affirmed the decisions of both the Commissioner and the Appellate Commissioner, leading to the dismissal of Appeal No. 182/2002 filed by the Department against the appellate Commissioner's order.

4. The Tribunal highlighted the relevance of the findings in the cases of Famous Cine Laboratory and Moti Laminates (P) Ltd. to the present dispute. The principles established in these cases regarding marketability and excisability of products with limited shelf-life under normal conditions were applied in the current judgment. The Tribunal emphasized the necessity for the department to prove marketability of products to establish excisability, which was not successfully demonstrated in this case.

In conclusion, the Tribunal upheld the decisions of the Commissioner and the Appellate Commissioner, dismissing the appeals filed by the Department and affirming that the chemical preparations and spent hypo-solutions used by the respondents were not excisable.