2010 (1) TMI 539 - AT - Central Excise

goods were sold by 100% EOU in domestic area - levy of duty on such goods - Section 3 of the Central Excise Act, 1944 prescribes the incidence of duty in respect of the goods manufactured and that too, manufactured in India and such manufactured goods being marketable and finding place in the tariff list under Central Excise Tariff Act, 1985 for levy Held that - mere appearance of the goods manufactured in the Tariff list shall not ipso facto liable to excise duty - Once the goods is not excisable, there is no question of any leviability taking shelter of Section 3(1)(ii) of the Central Excise Act, 1944. Accordingly, Revenue s appeal is dismissed.

Summary

Issues:
Interpretation of Section 3 of the Central Excise Act, 1944 regarding the levy of duty on goods sold by 100% EOU in the domestic area.
Determining the excisability of goods based on the criteria of manufacture and marketability.
Importing the definition of "excisable goods" from Section 2(d) of the Central Excise Act, 1944 to Section 3 for construction.

Analysis:
The judgment involves a dispute regarding the levy of Central Excise duty on goods sold by a 100% Export Oriented Unit (EOU) in the domestic area. The Appellate Tribunal considered the interpretation of Section 3 of the Central Excise Act, 1944, which prescribes the incidence of duty on goods manufactured in India and finding a place in the Central Excise Tariff Act, 1985 for levy. The Tribunal noted that excisability of goods is determined by the criteria of manufacture and marketability. Mere appearance of goods in the Tariff list does not automatically make them liable to excise duty if they do not meet the test of marketability.

The Tribunal referred to the definition of "excisable goods" provided in Section 2(d) of the Central Excise Act, 1944, which includes goods specified in the First and Second Schedules of the Central Excise Tariff Act, 1985. Importing this definition to the proviso of Section 3(1), the Tribunal concluded that if the goods in question do not find a place in the Tariff Act and do not correspond to any entries therein, they cannot be considered excisable goods. Therefore, the order passed by the Appellate Authority, which held that the goods were not excisable and thus not liable to duty, was upheld.

The Tribunal dismissed the Revenue's appeal, emphasizing that if goods are not excisable, there is no basis for levy under Section 3(1)(ii) of the Central Excise Act, 1944. The judgment highlights the importance of meeting the criteria of manufacture and marketability for goods to be considered excisable and subject to duty under the relevant provisions of the law.