2004 (2) TMI 540 - AT - Central Excise

Summary

Issues:
- Whether "bleach liquor" manufactured by the Respondents is chargeable to Central Excise duty.

Analysis:
In the appeals filed by the revenue, the central issue revolves around determining the chargeability of "bleach liquor" to Central Excise duty. The revenue argues that the bleach liquor, an intermediate product in the manufacture of paper, falls under sub-heading No. 2828.90 of the Schedule to the Central Excise Tariff Act. They contend that the bleach liquor is marketable and should be subject to duty, citing various decisions to support their stance. On the other hand, the Respondents argue that the bleach liquor is not marketable due to its short shelf life and instability, as highlighted by the Central Pulp & Paper Research Institute. They emphasize that the burden of proving marketability lies with the Revenue, and without concrete evidence, the product should not be subjected to duty.

The revenue asserts that the bleach liquor is a marketable product classified under sub-heading 2808.90 of the Tariff, emphasizing the presence of a specific heading in the Harmonized System of Nomenclature (H.S.N.) as evidence of marketability. They argue that even if the product is not actively marketed by the Respondents, its capability to be sold in the market is sufficient to warrant duty imposition. The revenue relies on legal precedents to support their position that marketability is a crucial factor in determining excisability, irrespective of actual sales in the market.

In contrast, the Respondents present a detailed explanation of the manufacturing process of bleach liquor in Pulp and Paper Mills, highlighting its specific use in bleaching pulp for paper production. They reference expert opinions from the Central Pulp & Paper Research Institute, indicating that the bleach liquor's commercial viability is questionable due to its dilution, low stability, and short shelf life. The Respondents stress that without concrete proof of marketability, the bleach liquor should not be subject to excise duty.

Upon considering the arguments from both sides, the Tribunal emphasizes the significance of marketability in determining excisability. Citing legal precedents, the Tribunal underscores that for a product to attract excise duty, it must be capable of being bought and sold in the market. The Tribunal notes the findings of the Adjudicating Authority regarding the short shelf life and instability of the bleach liquor, which hinders its marketability. The Tribunal concludes that the Revenue failed to provide substantial evidence to establish the marketability of the bleach liquor, relying solely on the product's classification in the Tariff. Consequently, the appeals filed by the Revenue are rejected, affirming that the bleach liquor manufactured by the Respondents for captive use is not subject to Central Excise duty.