2001 (12) TMI 892 - AT - Central Excise

Summary

Issues Involved:
1. Dutiability of unvulcanized sandwiched fabric assembly.
2. Marketability of the intermediate product.
3. Applicability of exemption notifications.
4. Invocation of the extended period of limitation.
5. Imposition of penalty.

Issue-wise Detailed Analysis:

1. Dutiability of Unvulcanized Sandwiched Fabric Assembly:
The primary issue was whether the unvulcanized sandwiched fabric assembly, used as an intermediate product in the manufacture of rubberized canvas footwear, is dutiable. The Commissioner of Central Excise classified the product under heading 59.05 of the Central Excise Tariff and confirmed a duty demand of Rs. 89,77,064.00 along with a personal penalty of Rs. 1 crore. The appellant contended that the product was in a raw, crude, and elementary stage, not vulcanized, and thus not marketable or excisable. The Revenue argued that the product was excisable as it emerged as a new product during the manufacturing process.

2. Marketability of the Intermediate Product:
The appellant provided evidence, including expert opinions and affidavits, to argue that the unvulcanized fabric was not marketable due to its short shelf life and raw state. The Commissioner, however, found the product to be stable and marketable. The Tribunal reviewed various authoritative books and previous judgments, emphasizing that marketability is essential for a product to be excisable. The Tribunal noted that the Revenue failed to provide concrete evidence of marketability, relying instead on the fact that the product was sent to job workers, which was insufficient to prove marketability.

3. Applicability of Exemption Notifications:
The appellant argued that the benefit of exemption under Notification No. 5/87-CE was wrongly denied, as the rubber content in the fabric predominated by weight. The Commissioner dismissed this claim, citing a chemical examiner's report that indicated a predominance of textiles. The Tribunal did not provide a conclusive finding on this issue due to the decision on the product's marketability.

4. Invocation of the Extended Period of Limitation:
The appellant contended that the extended period of limitation was not applicable as the facts were known to the Revenue, and there was no suppression of information. The Commissioner invoked the extended period under Section 11A of the Central Excise Act, arguing that the appellant did not declare the manufacture of rubberized fabrics in their statutory records. The Tribunal did not address this issue in detail, focusing on the marketability aspect.

5. Imposition of Penalty:
The appellant challenged the imposition of a Rs. 1 crore penalty, arguing it was unjustified. The Commissioner justified the penalty based on the contraventions of the provisions of the law. The Tribunal did not provide a detailed analysis on this issue due to the decision on the product's marketability.

Separate Judgments by Judges:
The Tribunal had a difference of opinion between Member (Judicial) and Member (Technical). Member (Judicial) concluded that the product was not marketable and thus not excisable. Member (Technical) held that the product was marketable and excisable, relying on the Calcutta High Court's decision in the appellant's own case. The matter was referred to a third member, who agreed with the Member (Technical), concluding that the product was marketable and excisable. The final order rejected the appeal on merits but did not address the issues of limitation, applicability of notification, and quantum of penalty, which were to be reheard.