2006 (4) TMI 394 - AT - Central Excise

Summary

Issues:
1. Classification of goods as excisable or non-excisable based on marketability.
2. Interpretation of the exemption policy for intermediate products used in manufacturing finished goods.
3. Application of legal precedent in determining marketability and excisability of goods.

The judgment deals with the classification of goods, namely sulphur paste, zinc paste, and composite paste, used as intermediate products in manufacturing sheath contraceptives, as excisable or non-excisable based on their marketability. The appellant argued that these goods are not marketed and are solely used within the factory for manufacturing purposes, thus not meeting the criteria for excisability. The lower authorities' orders were challenged on the grounds of lack of substantiation of marketability of the impugned goods.

The department, represented by the SDR, supported the lower appellate authority's order, citing legal precedents such as Dharampal Satyapal v. CCE, New Delhi and A.P. State Electricity Board v. CCE, Hyderabad. It was argued that the goods have a short shelf life of about 7 days, making them marketable. The department contended that marketability is not dependent on actual marketing, as per the Supreme Court decisions referenced.

After considering both sides and reviewing the case records and cited decisions, the Tribunal found that the impugned goods, produced by physically mixing various inputs, were not sold by the appellants and were not marketed by any other manufacturer. The Tribunal noted the government's policy to exempt finished goods like contraceptives for family planning. Levying duty on intermediate products used for captive consumption would increase costs and defeat the purpose of the exemption. The Tribunal emphasized that excisable products must undergo manufacturing to create new marketable products, which was not the case for the impugned goods, leading to the conclusion that they were not excisable.

As a result, the Tribunal set aside the impugned order and allowed the appeal, determining that the goods in question were not excisable based on their lack of marketability and use solely for manufacturing purposes.

This summary provides a detailed analysis of the judgment, addressing each issue involved comprehensively.