1996 (12) TMI 203 - AT - Central Excise

Summary

Issues: Classification of goods under tariff sub-heading 54.09, Marketability of goods for excise duty, Alternative classification under tariff sub-headings 59.09 or 63.01

Classification of goods under tariff sub-heading 54.09:
The case involved the classification of goods manufactured by the appellants, who produced gauntlets for electric storage batteries. The issue arose when the department intended to levy duty on the fabrics used in the manufacturing process under tariff sub-heading 54.09, claiming that the polyester fabric had been processed by dipping in resin solutions. The lower authority imposed duty and penalty based on this classification. The appellants contended that the goods were not marketable at the stage the duty was intended to be levied. The adjudicating authority held that the goods were dutiable under sub-heading 54.09 due to the processing involving dipping in resin solutions.

Marketability of goods for excise duty:
The appellants argued that the goods were not marketable at the stage the duty was intended to be levied, supported by an affidavit stating the fabric was not marketable in its semi-wet condition. They relied on Supreme Court judgments emphasizing that goods must be marketable before becoming excisable, and the burden of proving marketability lies with the Revenue. The appellants contended that the lack of evidence from the department regarding marketability warranted setting aside the duty imposition. The Tribunal agreed, holding that the lack of evidence on marketability rendered the goods not excisable, thereby allowing the appeal and setting aside the duty and penalty.

Alternative classification under tariff sub-headings 59.09 or 63.01:
The appellants, in the alternative, argued that if the goods were deemed marketable, they should be classified under tariff sub-heading 59.09 as impregnated fabric due to the resin dipping process. They contended that the adjudicating authority overlooked this submission. However, the Tribunal did not delve into this alternative classification issue as it found the goods not marketable, thereby setting aside the duty imposition without considering the alternative classification arguments.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the lack of evidence on the marketability of the goods rendered them not excisable under tariff sub-heading 54.09. The appeal was allowed, and the duty and penalty were set aside. The Tribunal did not address the alternative classification arguments due to the finding on marketability.