2002 (8) TMI 188 - AT - Central Excise

Summary

Issues involved: Interpretation of Central Excise Tariff Act, 1985 regarding duty on coal tar pitch used in manufacturing dolomite bricks; applicability of Notification 67/95-C.E.; determination of marketability of molten coal tar pitch; classification of dolomite bricks as intermediate product.

Summary:
The appellants, engaged in manufacturing steel products, use coal tar pitch in producing dolomite bricks for their furnaces. A show cause notice was issued proposing duty on the coal tar pitch consumed in manufacturing dolomite bricks, claiming it was not eligible for exemption under Notification 67/95-C.E. After the reply submission, duty demand was confirmed, leading to this appeal.

1. Marketability of Coal Tar Pitch:
The Department alleged marketability of the molten coal tar pitch based on the appellants also producing solid pitch for sale. However, the Tribunal emphasized the need for evidence proving marketability in the consumed state. Citing various precedents, it was established that duty can only be demanded if the goods are capable of being marketed in the condition they are consumed.

2. Applicability of Notification 67/95-C.E.:
The Commissioner rejected the appellants' claim under Notification 67/95, stating dolomite bricks were the final product exempt from duty, thus denying the benefit to coal tar pitch. Contrary to this, the Tribunal referred to legal decisions and clarified that refractory materials like dolomite bricks are used in or in relation to the final product's manufacture. The Department's extension of the notification to dolomite bricks supported this interpretation.

3. Classification of Dolomite Bricks as Intermediate Product:
In the absence of a clear definition of 'intermediate product', the Tribunal considered dolomite bricks as such when consumed within the factory. Following precedent, it was determined that coal tar pitch used in manufacturing an intermediate product, which further contributes to the final product, should be deemed as used in or in relation to the final product's manufacture. Circulars from the Board also supported this view.

In conclusion, the Tribunal set aside the order and allowed the appeal based on the findings regarding marketability, Notification 67/95-C.E., and the classification of dolomite bricks as an intermediate product.