1990 (9) TMI 154 - AT - Central Excise

Summary

Issues Involved:
1. Excisability and classification of "capping cement" under Central Excise Tariff.
2. Marketability and shelf life of the "capping cement".
3. Imposition of penalty on the assessee.

Issue-wise Detailed Analysis:

1. Excisability and Classification of "Capping Cement":
- The appellants challenged the classification of "capping cement" under Heading 32.14 of the Central Excise Tariff Act, 1985, arguing it was not a manufactured product as per Section 2(f) of the Central Excises and Salt Act.
- The Collector of Central Excise, Calcutta, confirmed the classification under Chapter 32.14, stating that the product was composed of resin and fillers and used for binding metal caps to glass shells of electric lamps.
- The Tribunal referred to the Explanatory Note to Heading 32.14 in the Harmonised Commodity Description and Coding System, which includes preparations used to stop, seal, or bond components, and found the classification under Heading 32.14 to be maintainable.

2. Marketability and Shelf Life of the "Capping Cement":
- The appellants contended that the "capping cement" had a short shelf life (24 to 48 hours) and was not marketable, thus not excisable.
- The Supreme Court's decision in the Ambalal Sarabhai case was cited, emphasizing that marketability is an essential ingredient for a product to be considered excisable.
- The Tribunal noted that the department did not conduct any inquiry to establish the marketability of the "capping cement". The Collector's and Assistant Collector's orders were criticized for not addressing the essential requirement of proving marketability.
- The Tribunal remanded the case for de novo adjudication to establish the marketability of the "capping cement" with evidence, as required by the Supreme Court's precedent.

3. Imposition of Penalty on the Assessee:
- The Collector of Central Excise imposed a penalty of Rs. 40,000/- under Rule 173Q of the Central Excise Rules, 1944, on the grounds of non-compliance with excise formalities.
- The Tribunal found no justification for the penalty, especially since the Collector had found no grounds to allege suppression of facts by the assessee.
- The penalty was set aside, recognizing that the imposition was unwarranted given the circumstances and the findings of the Collector.

Conclusion:
The Tribunal set aside the impugned orders and remanded the case to the Collector of Central Excise, Calcutta-I, and the Assistant Collector of Central Excise, Calcutta 'E' Division, for de novo adjudication. The authorities were directed to establish the marketability of the "capping cement" with evidence and afford the assessee an opportunity to present their case. The penalty imposed on the assessee was also set aside.