2009 (3) TMI 184 - AT - Central Excise

Marketability Incidence of excise levy of duty - Revenue proposed to classify intermediary goods C.I. Casting under sub-heading no. 7207.10 of the CETA, 1985 in the show cause notice. The appellant in reply to the show cause notice took a definite stand that the goods are not marketable. It is supported by the statement of the Works Manager. On the other hand, the ld. DR submits that the appellant had been selling similar casting till 1990. It is well settled that in order to satisfy the test of marketability, it is required to prove that the goods should be capable of being marketed and the product is commercially known. We find that the lower authorities have failed to consider this aspect, which are required to be examined on the basis of evidences.

Issues:
1. Classification of C.I. Castings under Central Excise Tariff Act, 1985.
2. Marketability of intermediary product C.I. Castings.
3. Demand of duty and penalty.
4. Applicability of Notification No. 56/95-C.E.
5. Limitation period for demand of duty.
6. Suppression of material facts by the appellant.

Classification of C.I. Castings:
The case involved a dispute over the classification of C.I. Castings under the Central Excise Tariff Act, 1985. The appellant contended that the goods should be classified under Heading No. 84.37, exempted by Notification No. 56/95-C.E., as they were used in the manufacture of C.I. Chilled Rolls. On the other hand, the Revenue proposed classification under sub-heading No. 7207.10. The appellant argued that the goods did not have the essential character of finished goods and should be considered as blanks. The Tribunal emphasized the necessity to determine the proper classification based on evidence and remanded the matter to the Original Authority for further examination.

Marketability of C.I. Castings:
The central issue revolved around the marketability of the intermediary product, C.I. Castings. The appellant asserted that the goods were not marketable, citing the absence of sales and the nature of the product as "un-finished Rolls Blank." The Revenue contended that the castings were sold to customers who placed orders, indicating marketability. The Tribunal highlighted the requirement to establish marketability based on commercial knowledge and capability of being sold in the market. It found that the lower authorities had not adequately considered this aspect and remanded the case for a fresh examination of marketability and other related issues.

Demand of Duty and Penalty:
The case also addressed the demand of duty and penalty imposed by the Original Authority. The appellant argued that the demand for the extended period of limitation and penalty were not sustainable as the Tribunal had already confirmed the demand for the normal period and set aside the penalty. The Tribunal directed the Original Authority to re-examine the demand of duty and penalty in light of the classification and marketability issues raised by the appellant.

Applicability of Notification No. 56/95-C.E.:
The applicability of Notification No. 56/95-C.E., which exempted C.I. Chilled Rolls from central excise duty, was a crucial aspect of the case. The appellant contended that the C.I. Castings used in the manufacture of the exempted final product should also be exempt. The Tribunal highlighted the need to determine the eligibility for exemption based on proper classification and marketability of the intermediary product.

Limitation Period for Demand of Duty:
Regarding the limitation period for the demand of duty, the appellant argued that the demand for the extended period was not justified as the Tribunal had already ruled on the normal period of limitation. The Tribunal directed the Original Authority to re-evaluate the demand considering the issues of classification and marketability, providing the appellant with an opportunity to present evidence.

Suppression of Material Facts:
The Revenue alleged that the appellant had suppressed material facts from the Department, justifying the invocation of the extended period of limitation and imposition of a penalty. The Tribunal emphasized the importance of a thorough examination of all issues raised by the appellant, including the allegation of suppression, and directed the Original Authority to conduct a de-novo proceeding with proper opportunity for hearing.

In conclusion, the Tribunal set aside the impugned order and remanded the case back to the Original Authority for a fresh examination of the classification, marketability, demand of duty, applicability of exemption notification, limitation period, and the alleged suppression of material facts, ensuring a comprehensive review of all contentions raised by the parties.

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