1996 (6) TMI 242 - AT - Central Excise

Issues Involved:
1. Whether the intermediate product, referred to as "Resin," manufactured by the appellant is dutiable.
2. Whether the intermediate product is marketable and can be classified under Tariff Item 15A(1).
3. The applicability of the evidence provided by the expert and other affidavits.
4. The relevance of previous judicial decisions and their applicability to the present case.

Detailed Analysis:

Issue 1: Dutiability of the Intermediate Product
The primary issue in this case is whether the intermediate product, referred to as "Resin," manufactured and captively consumed by the appellant, is dutiable. The Collector of Central Excise had confirmed the demand of duty on this "Resin," alleging it was manufactured at an intermediate stage and captively consumed in the manufacture of Wire Enamel from 1-8-1982 to 31-12-1982. The appellant contended that the process adopted is a continuous, integrated, and uninterrupted process, and that no identifiable goods come into existence capable of removal. The Collector, however, held that the Resin is capable of being separated and marketed, thus making it dutiable.

Issue 2: Marketability and Classification Under Tariff Item 15A(1)
The appellant argued that the intermediate product is not marketable and does not fit the definition of "goods" as it is not capable of being sold or marketed in its current form. The Collector, however, referred to earlier chemical tests indicating that the product had Resin content ranging from 29% to 42% and held that it is capable of being marketed. The Tribunal analyzed the definition of "manufacture," which implies a new and different article emerging, having a distinctive name, character, and use. The Tribunal noted that "goods" must be an article that can ordinarily come to the market to be bought and sold, and marketability is an essential ingredient to hold that an article is dutiable.

Issue 3: Expert Evidence and Affidavits
The appellant relied on the affidavit of Dr. S.K. Potnis, an expert in Polymer Technology, who stated that the intermediate product is not Resin as known to Chemistry or the trade and cannot be used as such. The Tribunal noted that Dr. Potnis had visited the appellant's factory and studied the process, concluding that the product is a mixture of different components and not a marketable commodity. The Tribunal also considered affidavits from two traders and the appellant's Works Manager, which supported the claim that the product is not marketable. The Collector, however, did not accept the expert's affidavit and based his findings on assumptions and conjectures.

Issue 4: Relevance of Previous Judicial Decisions
The Tribunal referred to several judicial decisions, including the Supreme Court's rulings in Union of India v. Delhi Cloth and General Mill Co. Ltd. and Indian Cable Co. Ltd. v. Collector of Central Excise, Calcutta, which emphasized that marketability is a crucial factor in determining dutiability. The Tribunal also considered the High Court of Bombay's decision in Union of India v. Shakti Industries Pvt. Ltd., which dealt with a similar issue and accepted Dr. Potnis's expert evidence, holding that the intermediate product was not marketable and hence not dutiable.

Conclusion:
The Tribunal concluded that the intermediate product, though a polycondensation product, is not "artificial Resin" as known to the trade or market and is not marketable. The product does not attract Tariff Item 15A(1) and is not dutiable. The Tribunal set aside the impugned order and allowed the appeal, emphasizing that the product is not a marketable commodity and hence not excisable.

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