2017 (4) TMI 211 - AT - Central Excise

Taxability - bulk drug 4 Hydroxy 7 Chloroqununoline - It is the case of the Revenue that 4 Hydroxy 7 Chloroqununoline emerging as intermediate product has distinct identity and marketability and since the final product is exempt, this intermediate product should suffer duty in the absence of any exemption - N/N. 6/2003-C.E. - Held that - during the material time the subject goods which are admittedly used captively by the Respondent were covered for exemption under the above-mentioned Notification - As such we find the Respondent non-liability on Central Excise duty as held by the impugned order is correct - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the intermediate product, 4 Hydroxy 7 Chloroqununoline, emerging in the manufacture of a final exempted product, is liable to discharge duty.

Analysis:
The appeal before the Appellate Tribunal CESTAT NEW DELHI involved a dispute regarding the liability of an intermediate product, 4 Hydroxy 7 Chloroqununoline, arising during the production of a final exempted product, to pay Central Excise duty. The Revenue contended that since the intermediate product had distinct identity and marketability, it should be subject to duty despite the final product being exempt. The original authority upheld the demand, but the Commissioner (Appeals) reversed this decision in the impugned orders.

The Revenue argued that there was sufficient evidence to prove the market availability of the intermediate product, justifying its liability for Central Excise duty. On the other hand, the Respondent's counsel contended that the demand was dropped based on two grounds: first, the lack of established marketability of the product by the Revenue, and second, the exemption of intermediate products used within the factory for drug manufacture under an amended Notification.

After hearing both parties and examining the records, the Tribunal found that during the relevant period, the intermediate goods used captively by the Respondent were indeed exempted under the mentioned Notification, a fact not contested by the Revenue. Consequently, the Tribunal upheld the non-liability of the Respondent for Central Excise duty, as determined in the impugned order. The Tribunal emphasized that since the intermediate products were covered by the exemption notification, the question of marketability did not need to be addressed, leading to the dismissal of the Revenue's appeals.

In conclusion, the Tribunal's decision rested on the specific exemption status of the intermediate product under the applicable Notification, resulting in the rejection of the Revenue's appeal and affirming the non-liability of the Respondent for Central Excise duty.