2017 (11) TMI 1294 - AT - Central Excise

Manufacture - job-work - excisability/marketibility - the appellant were only fitting some parts in the blank cabinets for various equipments, such as, battery Management System, electrical panel, air-cooling system and similar items - It is the claim of the appellant that the goods which are being cleared after job work are incomplete goods and are not marketable at that stage - Held that - Perusal of the photographs indicate that the appellant has only populated some of the components in the enclosures supplied by the principal manufacturer. These are undoubtedly in the form of incomplete systems of various equipments and definitely cannot be marketed - There is nothing on record produced by Revenue that the incomplete goods are capable of being marketed without further processing. Since marketability is a very important aspect of manufacture, we are led to conclude that the goods cannot be considered as manufactured in the form in which they are cleared from the appellant s factory. Appeal allowed - decided in favor of appellant.

Summary

Issues: Duty exemption under Notification No.50/2003-CE, Job work for incomplete goods, Marketability of goods

Duty Exemption under Notification No.50/2003-CE:
The case involved M/s Acme, manufacturers of Telecommunication Green Shelter systems availing duty exemption under Notification No.50/2003-CE. M/s MI Telecom was engaged in job work for M/s Acme during the disputed period of 2003-04 & 2004-05. The Department contended that goods manufactured on job work basis for M/s Acme by MI Telecom would not be eligible for exemption under Notification No.214/1986-CE. A duty demand was confirmed against the appellant, leading to an appeal.

Job Work for Incomplete Goods:
The appellant argued that during the disputed period, M/s MI Telecom was only fitting parts in blank cabinets for various equipment, resulting in incomplete battery management systems, electrical panels, air-cooling systems, and regulators. They contended that these incomplete goods were not marketable and thus not excisable. The appellant emphasized that the goods only became complete at M/s Acme's premises, where they were cleared with duty exemption.

Marketability of Goods:
The crucial issue revolved around the marketability of the goods cleared by the appellant to the principal manufacturer. The appellant relied on case laws and the test of marketability laid down by the Supreme Court in the Bata India Ltd case. The photographs submitted by the appellant showed that the goods were incomplete systems of various equipment, failing the test of marketability as established by the Apex Court. The Tribunal concluded that the incomplete goods could not be considered as manufactured in the form in which they were cleared from the appellant's factory, leading to the set-aside of the duty demand and allowing the appeals.

This detailed analysis of the judgment highlights the key issues of duty exemption, job work for incomplete goods, and the marketability of goods, providing a comprehensive understanding of the legal intricacies and the Tribunal's decision.