1995 (1) TMI 153 - AT - Central Excise

Summary

Issues Involved:
1. Exigibility of Molten Iron.
2. Marketability of Molten Iron.
3. Applicability of Notification No. 205/83-C.E.
4. Time bar on demands.

Summary:

1. Exigibility of Molten Iron:
The department issued a show cause notice alleging that the appellants were manufacturing excisable goods, specifically molten iron, under Tariff Item 25(i) of the Central Excises and Salt Act, 1944. The department demanded duty for the clearances of molten iron without payment of duty for manufacturing exempted ingot moulds and bottom stools. The appellants argued that molten iron, being in a red-hot condition and not marketable, is not dutiable.

2. Marketability of Molten Iron:
The appellants contended that molten iron is not marketable due to its high temperature (1300°C to 1400°C) and thus not considered "goods" for excisability. They relied on the Supreme Court's ruling in Bhor Industries Ltd. v. Collector of Central Excise, which established that marketability is an essential ingredient for dutiability. Certificates from the Development Commissioner, Ministry of Steel, and the Director, National Metallurgical Laboratory, supported their claim that molten iron is not marketed or known as merchandise.

3. Applicability of Notification No. 205/83-C.E.:
The appellants claimed that the condition of Notification No. 205/83-C.E. was satisfied as the molten iron used in ingot moulds and bottom stools was ultimately consumed in the manufacture of steel ingots. They argued that the principle of "later the better" applies up to the stage of the final product, which is cleared from the factory on payment of excise duty.

4. Time bar on demands:
The appellants argued that the demands were time-barred as the details of the products were mentioned in the RT-12 returns, and the department was aware of the process for several decades. The department countered that the appellants had not mentioned the quantity utilized in RT-12 returns, attracting a larger period for demand.

Judgment:
The Tribunal, considering the Supreme Court's rulings, held that marketability is essential for determining the dutiability of molten iron. The department failed to show that molten iron is known in the market or marketed in its high-temperature state. Therefore, the demand raised by the department was not sustainable. Additionally, the demands in the first appeal were also time-barred. The appeals were allowed, emphasizing that molten iron is not dutiable due to its lack of marketability.

Separate Judgment by P.C. Jain, Member (T):
P.C. Jain disagreed with the conclusion that marketability is essential in all circumstances for excisability. He cited cases where the Supreme Court did not consider marketability as relevant to exigibility. However, the majority decision held that marketability is essential for determining the dutiability of molten iron, and the appeals were allowed accordingly.