2001 (10) TMI 134 - AT - Central Excise

Summary

Issues:
Classification of 'Pan Masala' as 'Chewing Tobacco/Zarda' for duty levy under Central Excise Tariff Act, 1985; Consumability and marketability of intermediate product; Burden of proof on revenue to establish marketability; Time-barred demands.

Analysis:
1. Classification Issue:
The appeals raised a common question regarding the classification of 'Pan Masala' as 'Chewing Tobacco/Zarda' under the Central Excise Tariff Act, 1985. The dispute arose from show cause notices alleging that the appellants manufactured and cleared 'Chewing Tobacco/Zarda' liable for classification under specific headings. The appellants argued that the product was an intermediate stage item not ready for consumption, undergoing further processes before becoming consumable. They claimed that the product, not being in a marketable stage, should not be charged with duty.

2. Consumability and Marketability:
The key contention revolved around the consumability and marketability of the intermediate product. The appellants argued that the product was not consumable in its current form and required additional processing to become marketable. The Commissioner's order inferred marketability without substantial evidence, disregarding statements from witnesses stating the product was not consumable. The Tribunal emphasized that an expert opinion, unsupported by reasons, cannot solely form the basis of conviction without substantial corroboration. The burden to prove marketability lay with the revenue, which failed to establish the product as consumable and marketable.

3. Time-Barred Demands:
Regarding the time-barred demands, the Tribunal noted that the entire manufacturing process was known to the department, and the final product was cleared with duty payment. The appellants had not suppressed any information, and the department was aware of the manufacturing process. As a result, the demands were considered time-barred due to the lack of suppression of facts by the appellants.

4. Decision and Conclusion:
The Tribunal upheld the appellants' contentions, setting aside the impugned orders and allowing the appeals with consequential relief. The Tribunal emphasized that the revenue failed to establish the intermediate product as 'goods,' and since the Chief Commissioners accepted the orders from Pune and Vadodara dropping proceedings against the same appellants, the Tribunal inclined to accept the same stance. The Tribunal also noted the differences between the appellants' product and the one in the Bell Mark Tobacco case, emphasizing that the appellants' product was not similar to the one referenced in the Apex Court judgment relied upon by the Commissioner.