2015 (7) TMI 228 - AT - Central Excise

Marketability of product - mixture of graphite and clay - Held that - there is no evidence whatsoever that the mixture of graphite and clay is at all marketable. - Decision in the case of Umesh Pencil Processors (2009 (10) TMI 603 - CESTAT, CHENNAI), followed - Decided in favour of assessee.

Summary

Issues: Classification of goods under Heading 6815 1020, Marketability of mixture of graphite and clay, Applicability of earlier Tribunal decision

Classification of Goods under Heading 6815 1020:
The appellant requested early hearing of the appeal, citing a previous decision in Umesh Pencil Processors Pvt. Ltd. Vs. CCE, Coimbatore, where the Tribunal ruled in favor of the assessee. The issue revolved around whether the mixture of graphite and clay used in pencil manufacturing constituted a marketable product. The Tribunal in the Umesh Pencil Processors case examined whether this mixture amounted to manufacture and its marketability. The Tribunal concluded that without evidence of marketability, the mixture could not be bought or sold, leading to the assessee's success in the appeal. This decision was upheld by the Supreme Court, emphasizing the importance of marketability in determining goods' classification.

Marketability of Mixture of Graphite and Clay:
The Tribunal analyzed the marketability aspect of the mixture of graphite and clay, emphasizing that the goods must be shown to be marketable to be considered excisable. The Commissioner (Appeals) held that the mixture was a marketable product, disagreeing with the appellant's claim that it was not liable for duty due to non-marketability. However, the Tribunal, following the Umesh Pencil Processors case, reiterated that without proof of marketability, the goods could not be considered excisable, leading to the dismissal of the demand for duty and penalty. The Tribunal highlighted the importance of evidence of marketability and rejected the appeal filed by the Revenue due to the lack of such evidence.

Applicability of Earlier Tribunal Decision:
The Tribunal referred to the earlier decision in Umesh Pencil Processors to guide the current case, noting that the guiding decision met the test of the Supreme Court. The Tribunal emphasized the importance of evidence demonstrating marketability, as highlighted in the United Phosphorous case. Both authorities in the present case agreed that the mixture of graphite and clay was not marketable, and the department failed to provide evidence to the contrary. Consequently, the demand for duty and penalty was set aside, and the appeals were allowed, granting consequential reliefs. The present case fell within the scope of the Umesh Pencil Processors case, leading to the allowance of the early hearing application and appeal, with any refund to be processed according to the law.