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2020 (2) TMI 686 - AT - Central ExciseMarketibility/excisability - Milk Crumb - clearing the product to sister concern as intermediate goods - revenue neutrality - HELD THAT - There seems to be no dispute about various propositions of the law for determining excisability/dutiability of the goods. One of the tests that has to be conclusively established, is that the product is marketable. It has also been held in various decisions that marketability essentially does not mean being marketed - In the case of COMMISSIONER OF CENTRAL EXCISE, JAIPUR VERSUS HINDUSTAN ZINC LTD. 2004 (3) TMI 64 - SUPREME COURT , the Hon ble Supreme Court has specifically laid down that actual purchase or sale is not necessary for determining the marketability of any goods. What needs to be shown is that the product is capable of being taken to the market to be sold and the market recognizes the said product as such. Now examining the various evidences led in the present case, the first and the foremost being that the respondents themselves have been treating this goods as excisable and were discharging the duty demand on that till October 2006. Hence they were themselves treating these goods as marketable contrary to the decision in the case of COLLECTOR OF C. EXCISE, PUNE VERSUS HINDUSTAN COCOA PRODUCTS LTD. 1996 (7) TMI 257 - CEGAT, NEW DELHI - Once they themselves have been doing so, they cannot turn around and say that the product which was marketable till that date has become unmarketable. There is no dispute with regard to the shelf life of the product. Shelf life of the product is one of the determinant of the product being marketable. If some product is having no shelf life or a very short shelf life, then the same could not be held to be marketable as has been held in the decision of the Apex Court in the case of Moti Laminates. That is not the case here. Revenue neutrality - HELD THAT - If the issue was revenue neutral, the respondent would have paid the duty and taken the credit whatsoever, if the same was admissible. Secondly revenue neutrality can never be ground for not demanding the duty on the excisable goods in the form and manner they are being cleared by the assessee. Thus, the goods in question viz. milk crumb is marketable and hence excisable - appeal allowed - decided in favor of Revenue.
Issues Involved:
1. Excisability of 'Milk Crumbs' 2. Marketability of 'Milk Crumbs' 3. Applicability of the Finance Act, 2008 amendments 4. Revenue neutrality Issue-wise Detailed Analysis: 1. Excisability of 'Milk Crumbs': The primary issue was whether 'Milk Crumbs,' an intermediate product used in chocolate manufacturing, are excisable. The Commissioner initially held that 'Milk Crumbs' were non-excisable, relying on a previous CESTAT decision in the case of M/s Hindustan Cocoa Products. The Revenue argued that 'Milk Crumbs' are specified under Chapter Heading 1806 of the Central Excise Tariff Act, 1985, thus making them excisable. The Tribunal noted that the definition of 'excisable goods' under Section 2(d) of the Central Excise Act includes any article capable of being bought and sold for consideration, deeming such goods marketable. The Tribunal concluded that 'Milk Crumbs' are excisable as they are specified in the First Schedule to CETA, 1985, and satisfy the criteria for manufacture and marketability. 2. Marketability of 'Milk Crumbs': The Commissioner found no evidence proving the marketability of 'Milk Crumbs,' stating that marketability depends on whether goods are sold for consideration and whether the Sale of Goods Act applies. The Revenue countered that marketability does not require actual sale but the capability of being sold, citing web material from M/s International Customs Product offering 'Milk Crumb products' for sale. The Tribunal emphasized that marketability is a question of fact and must be determined in each case. It held that 'Milk Crumbs' are marketable based on their capability to be sold and their recognition in trade, supported by evidence of their shelf life and commercial identity. 3. Applicability of the Finance Act, 2008 Amendments: The Revenue argued that the definition of 'excisable goods' and 'marketability' underwent significant changes with the Finance Act, 2008, which should apply retrospectively. The Tribunal acknowledged that the explanation added to Section 2(d) clarified that goods capable of being bought and sold for consideration are deemed marketable. This explanation, being clarificatory, was considered retrospective, and the Tribunal applied it to the case, affirming that 'Milk Crumbs' are marketable and excisable. 4. Revenue Neutrality: The Commissioner also considered the issue of revenue neutrality, suggesting that even if duty was paid on 'Milk Crumbs,' it would be taken as credit by other units of the assessee, making the exercise revenue-neutral. The Tribunal rejected this reasoning, stating that revenue neutrality cannot justify non-payment of duty. It cited the Larger Bench decision in Jay Yushin Ltd. and the Supreme Court decision in Star Industries, which held that revenue neutrality is not a ground for not demanding duty on excisable goods. Conclusion: The Tribunal allowed the Revenue's appeal, setting aside the Commissioner's order. It held that 'Milk Crumbs' are marketable and excisable, and the amendments introduced by the Finance Act, 2008, apply retrospectively. The Tribunal also dismissed the argument of revenue neutrality, affirming that duty must be paid on excisable goods regardless of potential credit claims.
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