2002 (11) TMI 192 - AT - Central Excise

Summary

Issues involved:
Classification of product under Central Excise Tariff Act, marketability of product, imposition of penalty, demand of duty beyond limitation period.

Classification of product under Central Excise Tariff Act:
The appeal involved a dispute regarding the classification of products manufactured by the Appellants under the Central Excise Tariff Act. The Appellants argued that the product should be classified under Heading 59.09, while the Commissioner classified it under Heading 54.09. The Appellants contended that the product only becomes saleable after heat setting, satisfying the test of marketability as per legal precedents. The Appellants also raised issues regarding the number of processes required for classification and the limitation period for demanding duty.

Marketability of product:
The Tribunal analyzed the marketability of the product made of polyester yarn under Heading 54.09 of the Tariff. The Commissioner found that the product was marketable as it could be sold in the market, even if not actually sold. The Tribunal agreed with the Commissioner's findings, emphasizing that marketability is determined by the commercial identity of the goods and their capability of being bought and sold. The Tribunal held that the product was indeed marketable, allowing the extended period of limitation for demanding duty due to non-disclosure of manufacturing facts.

Imposition of penalty:
The Tribunal considered the imposition of penalty on the Appellants and referred to a decision by the Delhi High Court to set aside the penalty. The Tribunal agreed that no penalty could be imposed in this case, following the legal precedent.

Demand of duty beyond limitation period:
Regarding the demand of duty beyond the limitation period, the Tribunal remanded the matter to the Adjudicating Authority to verify the claim made by the Appellants that no duty was chargeable in the first three financial years due to nil Basic Excise duty. The Tribunal instructed the Adjudicating Authority to examine this aspect after providing a reasonable opportunity for the Appellants to present their case.

In conclusion, the Tribunal disposed of the appeal by upholding the classification of the product under Heading 54.09, confirming its marketability, setting aside the penalty, and remanding the matter for further examination of the duty demand in the initial years.