1996 (10) TMI 162 - AT - Central Excise

Summary

Issues:
1. Whether flares made from duty paid raw materials are liable to excise duty.
2. Whether the item in question is marketable and excisable.
3. Whether the demand for excise duty is barred by time.

Analysis:
1. The main issue in this case was whether flares made from duty paid raw materials, specifically glass tubes, are subject to excise duty. The appellant argued that the flare is not a new item but a continuation of the tube, which was classified under Tariff Item 23A(4). However, the adjudicating authority held that the flare is a distinct finished item and should be classified separately. The authority ruled that the party is liable to pay duty on the flares under Tariff Item 23A(4.

2. The appellant further argued that the Asstt. Collector and the Collector (Appeals) had previously determined that the item in question is not excisable as it was not marketed as such. They referenced a clarification from the Board of Customs and previous case law to support their argument. The Collector (Appeals) also noted that the flare was not marketable and fell under Tariff Item 68, exempted under Notification No. 118/75. The appellant contended that the burden of proving marketability lay with the department, which had not been discharged.

3. The Revenue countered that the item, although not marketed directly, was capable of being marketed as other manufacturers had produced similar items used in electric bulbs. However, the Tribunal found that the burden of proving marketability rested with the department, and mere production by other manufacturers was not sufficient evidence. The Tribunal agreed with the Asstt. Collector's findings that the item was not sold outside the factory and was not commercially known as a flare, concluding that the item was not excisable.

4. Additionally, the appellant argued that the demand for excise duty was time-barred due to the ongoing dispute regarding the excisability of the item. The Tribunal considered all submissions and records, noting that the item had not been marketed or sold outside the factory. Relying on the Asstt. Collector's detailed investigation and the Collector (Appeals) decision, the Tribunal concluded that the item in question was not excisable. The Tribunal set aside the impugned order and allowed the appeal with consequential relief.

This judgment clarifies the excisability of flares made from duty paid raw materials, emphasizing the importance of marketability in determining excisability and the burden of proof on the department. The decision was based on detailed investigations and previous rulings, ultimately ruling in favor of the appellant.