2007 (5) TMI 489 - AT - Central Excise

Summary

Issues:
- Demand of duty on "Gold Potassium Cyanide Solution" for the period October, 1987 - July, 1996
- Marketability of the above solution
- Appeal for waiver of pre-deposit and stay of recovery

Analysis:

Issue 1: Demand of duty on "Gold Potassium Cyanide Solution"
The lower authorities demanded duty of over Rs. 18 lakhs from the appellants for the period in question, in relation to the "Gold Potassium Cyanide Solution" used for electroplating sewing needles. The dispute revolved around whether this solution was marketable and excisable, falling under Heading 28.43 of the CETA Schedule. The original authority confirmed the duty demand, which was upheld by the Commissioner (Appeals), leading to the current appeal and application for waiver of pre-deposit and stay of recovery.

Issue 2: Marketability of the above solution
The appellants consistently argued that the "Gold Potassium Cyanide Solution" was not marketable and hence not dutiable. Despite the documentary evidence provided by the assessee against the marketability of the solution, the lower authorities rejected it without conducting an independent assessment. The process of preparation was detailed by the assessee, emphasizing its specialized nature for electroplating purposes. However, no chemical expert was consulted, and no chemical literature was examined by the authorities to ascertain the marketability of the item. The burden of proving marketability for levy of excise duty lies with the Revenue, and in this case, it was noted that the Revenue did not adequately discharge this burden.

Issue 3: Appeal for waiver of pre-deposit and stay of recovery
Considering the lack of conclusive evidence regarding the marketability of the "Gold Potassium Cyanide Solution" and the failure of the Revenue to establish it, the Tribunal was inclined to grant the waiver of pre-deposit and stay of recovery in respect of the duty amount demanded. The Tribunal found that the assessee's assertion of non-marketability was not effectively countered by reliable evidence from the Revenue, leading to the decision in favor of the appellants.

In conclusion, the judgment by the Appellate Tribunal CESTAT, CHENNAI highlighted the importance of establishing marketability for the levy of excise duty, emphasizing the burden on the Revenue to prove this aspect. The decision to grant waiver of pre-deposit and stay of recovery was based on the lack of conclusive evidence supporting the marketability of the disputed item, leading to a favorable outcome for the appellants.