2011 (2) TMI 1004 - AT - Central Excise

Demand and penalty - Marketability - Manufacture of fruit jelly with brand name Jelly-Belly - Held that - It is evidently clear from the records that for the earlier period in relation to the respondents own case and pertaining to the same product the adjudicating authority had held the product to be marketable and, therefore, excisable and the same was confirmed by the Commissioner (Appeals). It was not permissible for the Commissioner (Appeals) to take a different view for the subsequent period in the absence of any additional material being placed on record to support such different view. On one hand, the Commissioner (Appeals) has observed that there are no materials on record to establish the marketability of the product and at the same time the Commissioner (Appeals) has held that the product in question is of no use except for manufacturers like appellants to fill the same with jelly or any other liquid . The said finding clearly disclose the marketability aspect of the product - Decided in favour of assessee.

Summary

Issues:
Classification of product under Central Excise Tariff Act, 1985; Benefit of exemption under Notification No. 67/95-CE; Marketability of the product.

Classification of product under Central Excise Tariff Act, 1985:
The appeal involved a dispute regarding the classification of a product under chapter heading No. 2001 of the Central Excise Tariff Act, 1985. The respondents, engaged in manufacturing fruit jelly filled in plastic containers shaped like toys, were initially classifying the product under chapter sub-heading No. 2001.10, attracting a Nil rate of duty by virtue of Notification No. 6/2002-CE. However, the excise department revealed that the plastic containers used for filling the jelly were classifiable under a different heading and were liable to duty at 16%. The respondents had been availing the benefit of another notification for clearing the plastic containers at a Nil rate of duty. The dispute arose due to the interpretation of various notifications and the value of clearances made by the respondents.

Benefit of exemption under Notification No. 67/95-CE:
The respondents had been clearing plastic containers for captive consumption at a Nil rate of duty under Notification No. 67/95-CE. However, their eligibility for this exemption was restricted by Notification No. 8/2003-CE, which limited the benefit based on the value of clearances in the preceding financial year. As the respondents' clearances exceeded the specified limit, they were not entitled to the exemption under Notification No. 8/2003, leading to a demand for duty, interest, and penalty.

Marketability of the product:
The main issue revolved around the marketability of the product in question. The adjudicating authority confirmed the duty by considering the product marketable. However, the Commissioner (Appeals) set aside the order, stating that the department failed to produce evidence of the product's marketability. The Commissioner (Appeals) observed that the containers were not suitable for sale in the market and were only useful for manufacturers like the appellants to fill with jelly or liquid. The respondents argued that without evidence of marketability, the product could not be classified as excisable goods. The Tribunal noted that in a previous case involving the same product and parties, the product had been deemed marketable, and this decision was upheld by the Tribunal. The Tribunal found the Commissioner (Appeals)'s findings contradictory as they acknowledged the product's marketability in their own observations.

In conclusion, the Tribunal held that the impugned order could not be sustained due to the lack of additional material supporting a different view on marketability. The Tribunal set aside the Commissioner (Appeals)'s order and confirmed the order passed by the adjudicating authority, allowing the appeal and providing consequential relief to the appellant.