2001 (8) TMI 1153 - AT - Central Excise

Summary

Issues:
Whether duty is demandable on 'Liquid Electrolyte' as a distinct commodity and required to be considered as 'goods' during the manufacture of batteries.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Chennai revolves around the issue of whether 'Liquid Electrolyte' should be classified as 'goods' and thus subject to duty during the manufacturing process of batteries. The appellant argued that the process of creating 'Liquid Electrolyte' does not result in a separate identifiable product as it is an ionic conductor electrolyte used inside electrochemical units. The Commissioner had previously ruled against the appellant, considering 'Liquid Electrolyte' as a distinct product subject to duty. However, the Tribunal, in a similar case involving a competitor, held that the Department failed to prove the marketability of liquid electrolytes, thus not classifying them as 'excisable goods' under the Central Excise Act.

The Tribunal compared the facts of the present case with the precedent set by the Punjab Power Packs Ltd. case and found them to be identical. It was established that the process of creating 'Liquid Electrolyte' did not result in a new marketable commodity, and the Department had not met the burden of proving its marketability. The Tribunal cited relevant legal precedents, such as the case of Coromandal Prodorite Pvt. Ltd. v. Govt. of India, to support its decision that a mere change in form does not constitute manufacture if the end product remains the same in nature, character, and use.

Relying on previous decisions, including Collector of Central Excise v. Densons Engineers, the Tribunal concluded that the mixing of solid Potassium Hydroxide and Lithium Hydroxide with water did not create a distinct excisable commodity different from the solid forms. As a result, the Tribunal held that 'Liquid Electrolyte' was not excisable, setting aside the duty confirmation and penalty imposed by the Commissioner. The appeal was allowed based on the merits of the case, and the impugned order was overturned, granting consequential relief to the appellant as per the law.

In summary, the Appellate Tribunal CEGAT, Chennai, based on the principles of marketability and manufacturing criteria, ruled in favor of the appellant, determining that 'Liquid Electrolyte' did not qualify as 'goods' subject to duty during the manufacture of batteries. The Tribunal's decision was supported by legal precedents and a thorough analysis of the manufacturing process and marketability of the product.