2017 (2) TMI 1550 - AT - Central Excise

Excisability of goods u/s Central Excise Tariff Act prior to 10-5-2008 - mere manufacture does not make the goods excisable - requirement to satisfy twin test, that becomes excisable goods - HELD THAT - It does not appeal to common sense how non-excisable goods shall be dutiable without meeting the twin tests as has been held by the Apex Court in the case of BOARD OF TRUSTEES VERSUS COLLECTOR OF CENTRAL EXCISE, AP 2007 (8) TMI 350 - SUPREME COURT . Added to that, show cause notice exhibits that Revenue has not discharged its burden of proof to bring the goods to be called as marketable and traded commodity . Guidance also provided by the Apex Court in the case of CIPLA LTD. VERSUS COMMISSIONER OF C. EX., BANGALORE 2008 (3) TMI 330 - SUPREME COURT holding that manufacture does not ipso facto bring the goods to the fold of excisability without meeting the twin test. The adjudication having no foundation in law is liable to be unsustainable for which appeal is allowed.

Summary

Issues involved: Interpretation of excisability of goods u/s Central Excise Tariff Act prior to 10-5-2008.

Summary:
1. The Appellant argued that mere manufacture does not automatically make goods excisable, emphasizing the twin test criteria as established by the Apex Court in Board of Trustees v. CCE, A.P. The first test requires the goods to be manufactured and listed in the Central Excise Tariff Act, while the second test involves marketability. The goods produced by the Coimbatore unit were deemed intermediate and not marketable as a tradable commodity, hence not subject to duty when transferred to Pondicherry for further processing into finished goods.

2. The Revenue contended that duty is applicable when intermediate goods are manufactured.

3. The Tribunal found it illogical for non-excisable goods to be dutiable without meeting the twin tests, as per the ruling in Board of Trustees case. The show cause notice failed to prove the marketability and tradability of the goods, relieving the Appellant of liability.

4. The adjudication lacking legal basis was deemed unsustainable, leading to the allowance of the appeal.

5. The Tribunal also considered the precedent set by the Apex Court in Cipla Ltd. v. CCE, Bangalore, which highlighted that mere manufacture does not automatically render goods excisable without fulfilling the twin test criteria.