2017 (4) TMI 1219 - AT - Central Excise

Intermediate product - Gold Potassium Cyanide Solution - dutiability / marketability - product consumed by the appellant captively for manufacture of Gold Eyed Handle Sewing Needle - Held that - what is manufactured by the appellant is evidently Gold Potassium Cyanide Solution and not Gold Potassium Cyanide crystalline powder - it has not been established by Revenue as to the marketability of Gold Potassium Cyanide Solution manufactured by the appellant. This impugned product, therefore, fails to satisfy the twin tests namely (i) process constituting manufacturing and (ii) marketability - the product in question is definitely not marketable and therefore cannot be charged to duty - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Dutiability of "Gold Potassium Cyanide Solution" as an intermediate product for manufacturing Gold Eyed Handle Sewing Needle.

Analysis:
The issue in dispute pertains to the dutiability of the "Gold Potassium Cyanide Solution" used as an intermediate product by the appellant for manufacturing Gold Eyed Handle Sewing Needle. The primary question is whether this intermediate product is subject to duty or not.

In the initial round of litigation, the Tribunal had remanded the matter with specific directions related to the classification of the product, establishment of marketability, and the period for confirming duty liability. Subsequent proceedings led to a demand of &8377; 18,47,048 for a limited period, along with a penalty. The Commissioner (Appeals) upheld the duty demand while vacating the penalty, prompting the appellant to appeal again.

During the hearing, the consultant for the appellant highlighted the lack of discussion on the marketability of the Gold Potassium Cyanide Solution in the impugned order. The consultant argued that the product, being highly poisonous and unstable, cannot be marketed in its current form. On the other hand, the AR for the respondent contended that since the appellant manufactures the solution in the factory, it qualifies as a marketable product.

Upon reviewing the arguments and evidence presented, the Tribunal noted that the literature provided by the AR only pertained to the solid crystalline form of Gold Potassium Cyanide, not the solution manufactured by the appellant. The Tribunal emphasized that the marketability of the appellant's product had not been established by the revenue department. Referring to a landmark judgment, the Tribunal reiterated the twin tests of manufacturing process and marketability required for a product to be considered dutiable.

The Tribunal expressed disappointment over the failure of lower authorities to comply with specific remand instructions in previous rounds of litigation, resulting in prolonged legal proceedings spanning over 27 years. Ultimately, the Tribunal ruled that the Gold Potassium Cyanide Solution in question was not marketable and therefore could not be subjected to duty as proposed by the department. The impugned order was deemed unsustainable, and the appeal was allowed with any consequential benefits as per the law.