1994 (8) TMI 116 - AT - Central Excise

Issues Involved:
1. Classification and excisability of EPDM rubber tubing.
2. Marketability of the intermediate product.
3. Compliance with procedural provisions of Central Excise.

Detailed Analysis:

1. Classification and Excisability of EPDM Rubber Tubing:
The department filed an appeal against the order of the Collector of Central Excise, Calcutta, who had dropped the demand for duty on EPDM rubber tubing of unhardened vulcanised rubber. The department argued that the product fell under erstwhile TI 16A(3) of the Central Excise Tariff and was therefore excisable. The respondents did not dispute the chemical analysis which classified the product as unhardened vulcanised rubber tubing. The department contended that the product was an identifiable item with distinct character, name, and use, and thus should be subject to excise duty.

2. Marketability of the Intermediate Product:
The respondents argued that the EPDM rubber tubing was not marketable as it was used for captive consumption in the manufacture of synthetic hose pipes and was not sold in the market. They cited previous orders and Supreme Court decisions, particularly the Bhor Industries case, to support their claim that for an item to be excisable, it must be known in the market or capable of being sold. The Collector had previously determined that the product was not excisable as it was not marketed.

The department countered that the product's marketability was not limited to actual sales but included the capability of being sold. They referenced the Supreme Court's decision in Bhor Industries and Plasmac Machine Manufacturing Co. Pvt. Ltd., which stated that the actual sale was not necessary for an item to be considered marketable.

3. Compliance with Procedural Provisions of Central Excise:
The department emphasized that the respondents did not comply with the procedural provisions of Central Excise, such as declaring the item in the Classification List and completing the prescribed formalities. The Vice President noted that the respondents had not challenged the Chemical Examiner's opinion and had not filed a revised Classification List after starting the production of the tubing.

Separate Judgments:

Judicial Member's Judgment:
The Judicial Member focused on the lack of evidence provided by the Revenue to prove the marketability of the product. He concluded that the goods were used in captive consumption and were not sold in the market. He upheld the Collector's order, stating that the product was not dutiable under the Act, as it was not shown to be marketable.

Vice President's Judgment:
The Vice President disagreed, emphasizing that the product was specifically covered by a tariff entry and should be presumed excisable unless proven otherwise. He noted that the product was described as unhardened vulcanised rubber tubing in the Chemical Examiner's report and was covered under TI 16A(3). He criticized the respondents for not declaring the item and not complying with procedural requirements. He set aside the Collector's order and remanded the matter for de novo consideration, focusing on the product's classification and marketability.

President's Decision:
The President reviewed the differing opinions and agreed with the Vice President. He emphasized that the product's classification under TI 16A(3) and the procedural non-compliance by the respondents warranted a remand for further consideration. He concluded that the matter should be re-examined to determine the product's excisability based on its classification and marketability.

Final Order:
In view of the majority opinion, the order of the Collector was set aside, and the matter was remanded for de novo consideration in light of the observations and findings of the Vice President and the law.

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