2006 (1) TMI 598 - AT - Central Excise

Summary

Issues:
Classification of goods under Central Excise Act, 1944; Duty liability on intermediate product "Flat Ceramic Pieces"; Marketability of Flat Ceramic Pieces.

Classification of Goods:
The appellants, engaged in production of Mosaic Tiles, claimed exemption from Central Excise duty under Entry No. 22 of Notification No. 10/2003-C.E. The goods were classified as Mosaic Tiles under Heading 68.07 by the Apex Court. However, duty was raised on the intermediate product named "Flat Ceramic Pieces" emerging from the Furnace. The Commissioner classified these intermediate products under Chapter 69 of CETA, 1985, as unglazed or glazed tiles, chargeable to duty. The Tribunal remanded the matter to ascertain marketability and classification of individual pieces.

Duty Liability on Intermediate Product:
The Commissioner confirmed duty liability on the intermediate products, considering them as glazed or unglazed ceramic tiles under Chapter 69 of CETA, 1985. The Commissioner relied on various factors to establish marketability, such as affidavits, manuals, and internet references. However, the Tribunal found that the marketability of Flat Ceramic Pieces was not proven, and the mere potential for substitution of damaged pieces did not establish marketability. The rejection of affidavits based on credibility was deemed incorrect.

Marketability of Flat Ceramic Pieces:
The Tribunal emphasized that marketability must be established for excisability. The rejection of affidavits from professionals and reliance on stray websites were deemed insufficient to prove marketability. The websites referenced did not support the sale of individual Flat Ceramic Pieces. The Tribunal found that individual pieces were valueless and had no commercial meaning. The instruction manuals indicating replacement of defective tiles did not prove marketability. The demand on the intermediate product was deemed unjustified as the mosaic tiles were already made during the dispute period.

In conclusion, the Tribunal set aside the order, emphasizing the lack of evidence regarding the marketability of Flat Ceramic Pieces. The decision highlighted the importance of establishing marketability for excisability under the Central Excise Act.