2007 (7) TMI 162 - AT - Central Excise

Duty demand raised holding that Under frame & Covered type containers (CTC) are parts of wagons so are dutiable Dept. not proved marketability of above goods Wagon is build on under frame itself & at no stage a separate CTC comes in to existence Impugned order set aside.

Summary

Issues Involved:
1. Dutiability of Underframe and Covered Type Containers as parts of wagons.
2. Marketability of Underframe and Covered Type Containers.
3. Valuation of the parts in question.
4. Applicability of Notification No. 88/93 dated 4-5-1993.

Detailed Analysis:

1. Dutiability of Underframe and Covered Type Containers as Parts of Wagons:
The judgment addresses the dutiability of Underframe and Covered Type Containers during the period from 28-2-1993 to 3-5-1993. The tribunal notes that wagons were dutiable until 27-2-1993, making parts used captively exempt under Notification No. 217/86. However, with effect from 28-2-1993, wagons supplied to Indian Railways were exempted under Notification No. 60/93, and thus, the exemption for parts was not available during the disputed period. The impugned orders held that Underframe and Covered Type Containers were parts of wagons and chargeable to duty during this period.

2. Marketability of Underframe and Covered Type Containers:
The appellants argued that Underframe and Covered Type Containers were not marketable commodities. They described Underframe as a semi-finished structure integral to the wagon manufacturing process and not an independent marketable commodity. Similarly, they contended that Covered Type Containers did not exist as separate entities during the manufacturing process. The tribunal emphasized that for a product to be excisable, it must be manufactured and marketable, citing the Supreme Court decisions in Gujarat Nermada Valley Fertilizer Co. Ltd. v. Collector of Central Excise and Hindustan Zinc Ltd. v. CCE, Jaipur. The tribunal found no evidence from the Revenue to prove the marketability of these items and noted a letter from the Ministry of Railways stating that these goods were not marketable.

3. Valuation of the Parts in Question:
The appellants challenged the valuation adopted in the show cause notice, arguing that the cost of the Covered Type Container and Underframe was absurdly high, exceeding the value of the entire wagon. The tribunal found a lack of application of mind by the Adjudicating Commissioner in determining the value, noting that the valuation of the parts exceeded the total value of the wagon.

4. Applicability of Notification No. 88/93 dated 4-5-1993:
The appellants argued that Notification No. 88/93, which exempted parts of wagons, should be applied retrospectively from 28-2-1993. However, the tribunal did not address this issue, as it decided the appeals based on the marketability of the goods.

Conclusion:
The tribunal concluded that the Revenue failed to establish the marketability of the Underframe and Covered Type Containers, essential for levying Excise duty. The tribunal set aside the impugned orders, allowing the appeals, and did not delve into the retrospective applicability of Notification No. 88/93. Both appeals were allowed, and the judgment was pronounced in open court.