2003 (6) TMI 118 - AT - Central Excise

Summary

Issues Involved:
1. Excisability of compounded rubber.
2. Marketability of compounded rubber.
3. Shelf life of compounded rubber.
4. Validity of test and re-test reports.
5. Burden of proof on marketability.
6. Application of judicial precedents and CBEC circulars.

Detailed Analysis:

1. Excisability of Compounded Rubber:
The compounded rubber, manufactured by the appellants, fell under Heading 40.05/Sub-Heading 4005.00 of the CET Schedule during the relevant period. The appellants did not dispute this classification. The Tribunal confirmed that compounded rubber was excisable based on its specific coverage in the Central Excise Tariff Schedule and the test reports from CRCL, which identified the samples as compounded rubber with no signs of deterioration.

2. Marketability of Compounded Rubber:
The primary contention was whether the compounded rubber was marketable. The Tribunal held that the actual marketing of the goods was immaterial; what mattered was their capability of being marketed. The appellants argued that compounded rubber was not marketable due to trade secrecy and manufacturer-specific formulations. However, the Tribunal found that the chemical test reports, which showed no significant variation in composition among the samples from different manufacturers, disproved these arguments. The Tribunal also noted that the compounded rubber was transported between units of the same manufacturer, indicating its marketability.

3. Shelf Life of Compounded Rubber:
The shelf life of compounded rubber was crucial in determining its marketability. The CRCL test and re-test reports indicated that the samples had no apparent signs of deterioration, suggesting a sufficient shelf life. The Tribunal upheld the Commissioner's reliance on these reports, rejecting the appellants' claims that the re-tests were conducted on samples prepared in the laboratory rather than those drawn from their factories. The Tribunal found no evidence to support the appellants' claims about the short shelf life of their compounded rubber.

4. Validity of Test and Re-test Reports:
The appellants challenged the validity of the re-test reports, claiming that the tests were not conducted on the original samples. The Tribunal rejected this argument, finding that the re-tests were indeed conducted on the samples drawn from the factories. The Tribunal noted that the appellants did not cross-examine the Joint Director of CRCL regarding the first test report and found the re-test results consistent with the initial findings.

5. Burden of Proof on Marketability:
The Tribunal emphasized that the burden of establishing marketability lay with the Department. The evidence presented, including the chemical test reports and the transportation of compounded rubber between manufacturing units, was sufficient to prove marketability. The appellants failed to rebut this evidence effectively.

6. Application of Judicial Precedents and CBEC Circulars:
The appellants cited various judicial decisions and CBEC circulars to argue against the excisability of compounded rubber. However, the Tribunal distinguished these cases, noting that the specific facts and evidence in the present case, such as the chemical test reports and the transportation of the product, supported a finding of marketability. The Tribunal also found that the CBEC circulars cited by the appellants were commodity-specific and not applicable to compounded rubber.

Conclusion:
The Tribunal upheld the Commissioner's order, confirming the excisability and marketability of compounded rubber. The appeals were rejected, and the demand for duty was affirmed.