2008 (9) TMI 344 - AT - Central Excise

Excisability Marketability - Polymer Modified Bitumen Held that - Tariff classification of the Bitumen and Polymer Modified Bitumen are different. But, that is not important they have never been processing Polymer Modified Bitumen in their factory and it is always processed at the site for it can be used immediately in the hot mix operation. In these circumstances, Polymer Modified Bitumen cannot be bought and sold in the market since it would be fit for use only when it remains in molten condition and at a temperature around 160 C - impugned product is not excisable. The process carried out by the appellant does amount to manufacture. Hence, the demand of duty is not correct.

Summary

Issues: Excisability of 'Polymer Modified Bitumen', whether the process amounts to manufacture, applicability of Central Excise duty, marketability of the product, justification for invoking the longer period, and imposition of penalties.

Excisability of 'Polymer Modified Bitumen': The case revolved around whether the process of producing Polymer Modified Bitumen by adding certain additives to bitumen amounts to manufacture. The Commissioner contended that the process indeed constituted manufacture, citing differences in classification and quality enhancement. However, the appellants argued that the addition of polymers only enhanced properties and did not amount to manufacture. They also highlighted that the product was not marketable in its modified form, as it needed to be used immediately and could not be stored for long periods. The Tribunal analyzed the process, the opinions of experts, and relevant case laws to conclude that the product was not excisable, and the demand for duty was unjustified.

Applicability of Central Excise Duty: The appellants had paid Service Tax on the process under 'Business Auxiliary Services,' leading them to believe they were not liable for Central Excise Duty. They argued that the longer period could not be invoked due to differences in interpretation and their genuine belief regarding duty liability. The Tribunal considered this argument, along with the fact that Service Tax was already paid on the process, and ruled in favor of the appellants, stating that simultaneous imposition of Service Tax and Excise Duty on the same process was improper.

Marketability of the Product: A crucial aspect of the case was the marketability of the Polymer Modified Bitumen. The appellants contended that the product was not marketable in its modified form and was meant for immediate use in road construction at the site. They provided detailed explanations regarding the storage conditions required to maintain the product's properties. The Tribunal agreed with this argument, emphasizing that the product's specific storage and usage requirements rendered it unsuitable for traditional market sale, further supporting its decision that the product was not excisable.

Justification for Invoking the Longer Period and Penalties: The Tribunal found no justification for invoking the longer period for duty demand, especially when previous Commissioners had ruled against charging duty on the product. Additionally, given the lack of merit in the impugned order and the absence of grounds for penalties, the Tribunal ruled in favor of the appellants, setting aside the demand for duty and penalties. The judgment highlighted the importance of considering expert opinions, marketability, and past decisions in excise matters.

---