1988 (7) TMI 173 - AT - Central Excise

Summary

Issues:
1. Classification of rolls of cloth with release coating in the manufacture of waterproof cloth adhesive tapes under Central Excise Tariff (CET).
2. Whether the intermediate product was excisable goods and classifiable under Item No. 19-I(b) or 19-III of CET.
3. Marketability of the intermediate product and its liability for excise duty.

Analysis:
1. The case involved the classification of rolls of cloth with release coating in the manufacture of waterproof cloth adhesive tapes under the Central Excise Tariff. The manufacturing process was described in detail, and the excise authorities contended that the product fell under Item No. 19 III of CET, leading to a demand for duty payment and L4 license application.

2. The primary issue was whether the intermediate product of rolls of cloth with release coating was excisable goods and classifiable under Item No. 19-I(b) or 19-III of CET. The Assistant Collector initially ordered duty payment under Item No. 19 III, which was challenged through appeals and remands, ultimately leading to the Collector of Central Excise (Appeals) finding in favor of the respondents.

3. The crucial aspect was the marketability of the intermediate product and its liability for excise duty. The respondents presented expert opinions and trade opinions indicating that the product was not marketable as waterproof cloth and was merely an intermediate stage in the manufacturing process. The Assistant Collector's dismissal of this evidence without proper consideration was criticized, citing legal precedents emphasizing the importance of marketability for excise duty liability.

4. The Tribunal, after considering the evidence presented and legal precedents cited, concluded that the rolls of cloth with release coating did not fall under the relevant items of CET due to their lack of marketability. The Tribunal upheld the Collector of Central Excise (Appeals) order, stating that the non-marketable goods were not liable for excise duty, and subsequently dismissed the appeal filed by the Collector of Central Excise, Bombay-II.

This detailed analysis highlights the classification issues, excisability of the intermediate product, and the significance of marketability in determining excise duty liability, as addressed in the legal judgment by the Appellate Tribunal CEGAT, New Delhi.