1998 (1) TMI 131 - AT - Central Excise

Summary

Issues:
Classification of Beta Naphthol Tar and Bon Acid Tar as excisable goods under T.I. 68 of the Schedule to the erstwhile CET.

Detailed Analysis:

The issue in the appeal was the classification of Beta Naphthol Tar and Bon Acid Tar arising during the manufacture of Beta Naphthol and Bon Acid by the respondents. The Revenue contended that these were excisable by-products falling under the same Heading as the main products, while the assessees argued that these items were waste and scrap, thus not excisable.

The Tribunal considered the Deputy Chief Chemist's report, which highlighted that the disputed items had distinct characteristics from their raw materials and were known commercially as Beta Naphthol Tar and Bon Acid Tar. The products were regularly sold in the market, indicating they were by-products with market value. Therefore, the Tribunal held that the items were excisable goods falling under T.I. 68, confirming the demand raised by the Revenue.

The Tribunal emphasized that for a product to be excisable, it must have acquired the status of a commodity traded in the market with commercial value. It was irrelevant whether the product was a by-product or intended final product; what mattered was its market recognition and distinct identity. The Tribunal noted that one item was identified as Beta Naphthol Tar, while the identification of the other was inconclusive due to testing limitations.

The Tribunal referred to the respondents' admission in their reply that they manufactured Beta Naphthol Tar and Bon Acid Tar, indicating their awareness of these products' identity. Despite the assessees' argument that the materials were impurities or waste, the Tribunal emphasized the regular sale of these items over several months, demonstrating their market recognition and commercial value.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal based on the evidence of the items being recognized commodities with market value, falling under the classification of excisable goods. The Tribunal highlighted the importance of market recognition and commercial value in determining the excisability of products, irrespective of their origin or intended use.