2018 (10) TMI 457 - AT - Central Excise

Dutiability/marketibility - intermediate products in manufacture for the exempted goods - suppression of facts - Held that - It is the fact that the plastic jars which are manufactured by them is branded with Suruchi brand and cannot have independent marketability of itself - in various case laws also it is clearly held that it intermediate product do not have the marketability then the same case be subjected to excise duty. As per the case records there does not appear to be a deliberate intention by appellant to suppress any material facts from the Department. They were under the bona fide belief that they do not come under the purview of Central Excise as their turnover is less than the exemption limit as specified under the Notification 8/2003. On account of the marketability, limitation and the limit of small exemption Notification No.8/2003, the appellant is entitled for the benefit as claimed by them, and therefore, the impugned order is not sustainable and being set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Dutiability of intermediate products in manufacturing exempted goods.

Analysis:
The appeal was filed against the order passed by the Commissioner (Appeals) upholding the decision of the Adjudicating Authority. The appellant, engaged in the manufacture of pickles and spices, used an automatic machine to manufacture plastic bottles for packing the final product. The Revenue contended that since the plastic bottles were manufactured by the appellant, which is dutiable, the duty should be discharged on such products used for packing. The Preventive Officer observed the manufacturing process and noted that the plastic bottles were manufactured separately on automatic machines within the factory premises. The bottles were then packed with pickles and spices of various quantities and labeled with the company's details before being stored for sale. The appellant had not taken Central Excise Registration or paid duty on the products.

The appellant argued that the goods they manufactured were exempt, and therefore, they should not be liable to discharge duty on the intermediate goods. The Revenue alleged that the appellant deliberately suppressed material facts from the Department and acted mala fide. The Tribunal examined the issue of dutiability of intermediate products in the manufacturing process of exempted goods. It was noted that the plastic jars branded with Suruchi brand did not have independent marketability. Referring to relevant case laws, it was established that if intermediate products lack marketability, they may be subjected to excise duty.

The Tribunal found no deliberate intention by the appellant to suppress facts from the Department. The appellant believed in good faith that they were not liable for Central Excise duty due to their turnover being below the exemption limit specified in Notification 8/2003. The value of manufacturing packaging material during the relevant periods was below the threshold limit for SSI exemption. Considering marketability, limitations, and the exemption notification, the Tribunal concluded that the appellant was entitled to the claimed benefit. Therefore, the impugned order was set aside, and the appeal was allowed along with any consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellant, acknowledging their entitlement to exemption based on the marketability of intermediate products and compliance with the exemption limit specified under Notification 8/2003.