2008 (5) TMI 241 - AT - Central Excise

Goods supplied to the Defence Ministry for exclusive use in Defence Units - intermediate goods manufactured from CGI Sheets, intermediate goods manufactured from CGI Sheets, fabrication of which was strictly done as per specification received from the Defence Ministry - disputed items in question are fabricated in the course of manufacture of Shelter Barrels which carry zero rate of duty - items are not marketable - held that impugned goods are not dutiable.

Summary

Issues:
Manufacture and supply of Shelter Barrel to Defence Ministry, demand confirmation on intermediate goods, duty charge, marketability of disputed items.

Manufacture and Supply of Shelter Barrel:
The appeal was filed by the department against the order of the lower appellate authority regarding the manufacture and supply of Shelter Barrel to the Defence Ministry. The appellants argued that the impugned goods were intermediate goods manufactured from CGI Sheets strictly as per the Defence Ministry's specifications. The consultant for the appellants provided restricted documents showing that the disputed items had semi-circular shapes, not rectangular as claimed by the department.

Demand Confirmation on Intermediate Goods:
The department had confirmed a demand on the intermediate goods used in the manufacture of Shelter Barrels. The Tribunal carefully considered the manufacturing process and the restricted documents provided by the consultant. It was observed that the disputed items were fabricated in the course of manufacturing Shelter Barrels, which were supplied to the Defence Ministry at a "zero" rate of duty. The Tribunal found that the disputed items were not marketable but internally used in the fabrication of finished goods.

Duty Charge and Marketability of Disputed Items:
The department's appeal was rejected by the Tribunal as they failed to provide evidence supporting the marketability of the intermediate goods. The Tribunal upheld the lower appellate authority's decision that the impugned goods were not dutiable. Consequently, the department's appeal was dismissed, and the Cross Objection filed by the respondents was also disposed of.

In conclusion, the Tribunal found that the disputed items used in the manufacture of Shelter Barrels for the Defence Ministry were not subject to duty as they were not marketable and were internally used in the fabrication process. The decision was based on the lack of evidence provided by the department regarding the marketability of the intermediate goods.