2017 (5) TMI 1329 - AT - Central Excise

Intermediary product - impregnated special woven fabric - chargeability of duty/marketability - Held that - goods have emerged during the continuous process of manufacture of tubular bags and have got a self-life of only a few minutes. It is established that this intermediate product cannot be marketed and therefore it cannot be called as excisable goods - the goods are not marketable and therefore are not excisable and no duty of Central Excise leviable on the subject goods - appeal allowed - decided in favor of assessee.

Summary

Issues:
Classification of impregnated special woven fabrics for excise duty.

Analysis:
The appellant, a manufacturer of tubular bags, challenged the classification of the intermediary product, impregnated special woven fabrics, under chapter sub-heading 5903.29 for excise duty purposes. The dispute arose when the Deputy Commissioner of Central Excise held that the impregnated fabric falls under sub-heading 5903.29 and demanded excise duty from the appellant. The appellant contended that the impugned order was contrary to the law and binding judicial precedents. They argued that the impregnated fabric was not marketable and had a very short self-life, making it non-excisable. The appellant cited various decisions to support their claim, emphasizing that the goods, which were captively consumed in the manufacture of tubular bags, were not excisable goods. The appellant also highlighted a previous favorable decision by the Tribunal in their case for an earlier period.

The Tribunal considered both parties' submissions and examined the nature of the impregnated special woven fabrics. It was established that the intermediate product had a very short self-life and could not be marketed. Therefore, the Tribunal concluded that the impregnated fabric did not meet the criteria to be classified as excisable goods. Relying on the decisions cited by the appellant, the Tribunal held that no duty of Central Excise was leviable on the impregnated special woven fabrics. Consequently, the Tribunal allowed both appeals of the appellant with any consequential reliefs.

In summary, the judgment revolved around the classification of impregnated special woven fabrics for excise duty purposes. The Tribunal, after considering the arguments and evidence presented by both parties, concluded that the impregnated fabric, due to its non-marketability and short self-life, did not qualify as excisable goods. Therefore, the appellant was not liable to pay Central Excise duty on the impregnated special woven fabrics, and their appeals were allowed.