2017 (6) TMI 751 - AT - Central Excise

Intermediate goods - N/N. 6/2002-CE dated 01.03.2002 - Held that - In case of tax liability of intermediate products in a continuous product, it is for the Revenue to establish the marketability of such product. Though the product may not have been marketed by the appellant, the said product should be known in the market as capable of being bought and sold - matter remanded to the original authority to categorically give his finding regarding marketability of the impugned goods on which Central Excise duty is sought to be levied and collected - appeal allowed by way of remand.

Issues:
1. Liability of the appellant to pay Central Excise duty on intermediate goods, namely PVC coated fabric.
2. Interpretation of Notification No.6/2002-CE dated 01.03.2002 and Notification No.67/95.
3. Marketability of the intermediate product for levy of Central Excise duty.

Analysis:
1. The appeal challenged the order of the Commissioner (Appeals) Delhi-I, which upheld the Central Excise duty demand of &8377; 16,43,484/- on the appellant for the period April 2002 to February 2003. The dispute revolved around the liability of the appellant to pay duty on PVC coated fabric, an intermediate product in the manufacture of "Lay Flat Tubing." The Revenue sought to deny exemption under Notification No.67/95, leading to the imposition of penalty equal to the duty demanded.

2. The appellant argued that PVC coated fabric is an intermediate product that transforms into the final product, "Lay Flat Tubing." They contended that the coated fabric is not known in the market for sale and purchase, emphasizing that past imports of plastic sheets by the appellant were not comparable to the coated fabric now subjected to duty. The Revenue, however, relied on the marketability of the product and past imports to support the levy of duty on the coated fabric.

3. Upon review, the Tribunal found that the lower authorities failed to establish the marketability of the PVC coated fabric as required for the imposition of Central Excise duty on intermediate goods. The Tribunal disagreed with the notion that coated fabric is synonymous with plastic sheets and emphasized that the burden lies with the Revenue to prove the market recognition of the product. As the appellant contested the similarity between past imports and the current product, the Tribunal set aside the order and remanded the matter for a fresh decision, directing the original authority to determine the marketability of the goods in question.

4. The Tribunal's decision to remand the case for a fresh decision was based on the appellant's argument regarding the distinct nature of the imported goods and the lack of conclusive evidence regarding the market recognition of the intermediate product. By providing the appellant with an opportunity for a hearing, the Tribunal aimed to ensure a fair assessment of the liability for Central Excise duty on the PVC coated fabric, emphasizing the necessity for establishing marketability to support duty imposition.

This comprehensive analysis addresses the issues raised in the legal judgment, focusing on the liability of the appellant, the interpretation of relevant notifications, and the crucial aspect of marketability for the levy of Central Excise duty on intermediate goods.

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