2000 (12) TMI 110 - HC - Central Excise

Issues Involved:
1. Maintainability of the writ petition against show cause notices.
2. Classification and excisability of Elvamide solution under Central Excise Tariff Act, 1985.
3. Jurisdiction of excise authorities to impose duty on Elvamide solution.
4. Marketability and shelf life of Elvamide solution as a criterion for excisability.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The respondents argued that the writ petition is not maintainable against show cause notices as these are merely proposals for further action. They contended that the petitioner has the right to defend their case during adjudication proceedings and, if necessary, appeal to the appellate authority. However, the court referred to its previous decision in Madura Coats Ltd. v. Asstt. Collector of C. Ex. [1990 (48) E.L.T. 321], which held that once a writ petition is admitted and Rule Nisi is issued, it cannot be dismissed on the grounds of alternative remedies at the final stage. Given the seven-year pendency of the case, the court decided to address the merits, particularly the jurisdiction of the respondents to classify the product as excisable.

2. Classification and Excisability of Elvamide Solution:
The petitioner contended that Elvamide solution, having a limited shelf life and not being marketed or sold, is not an excisable product. They argued that the solution, prepared for captive consumption, does not constitute a new commodity and thus cannot be classified under Heading 3506. The respondents, however, maintained that the solution is a prepared adhesive with specific end-use and properties, making it excisable under sub-heading 3506 of the Central Excise Tariff Act, 1985.

3. Jurisdiction of Excise Authorities:
The petitioner argued that the excise authorities lacked the jurisdiction to classify Elvamide solution as an excisable product since it is not marketed or sold and does not constitute a new product. The court emphasized that excise duty is imposed on goods that are manufactured and marketable. The transformation of Elvamide granules into a solution does not result in a new commodity with distinct characteristics and marketability.

4. Marketability and Shelf Life of Elvamide Solution:
The court examined several Supreme Court judgments to determine the excisability of the product. In Collector of C. Ex. v. Ambalal Sarabhai Enterprises [1989 (43) E.L.T. 214], the Supreme Court held that for an article to be "goods," it must be known in the market or capable of being sold. The court also referred to Moti Laminates Pvt. Ltd. v. C.C.E. [1995 (76) E.L.T. 241 (S.C.)] and Bhor Industries Ltd. v. Collector of Central Excise [1989 (40) E.L.T. 280], which emphasized marketability as a crucial factor for excisability. The court found that the Elvamide solution, with a limited shelf life and not being marketed, does not meet the criteria for excisability. The solution is prepared for captive consumption and does not result in a new, marketable product.

Conclusion:
The court concluded that the Elvamide solution is not excisable as it does not constitute a new, marketable commodity. The impugned proceedings were quashed, and the writ petition was allowed. Consequently, connected W.M.Ps. were closed.

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