1998 (2) TMI 208 - AT - Central Excise

Summary

Issues:
- Chargeability of excise duty on intermediate products
- Marketability of intermediate products
- Time-barred demand of duty

Analysis:

Chargeability of excise duty on intermediate products:
The Revenue sought to charge excise duty on four intermediate products arising during the manufacture of two bulk drugs. The adjudicating authority confirmed the duty demand, citing marketability of the intermediate products and suppression of facts by the appellants. However, the appellants argued that the products were not marketable as they were crude and required further refinement. They presented affidavits supporting the non-marketability claim. The tribunal noted that the Revenue failed to provide evidence of marketability and did not address this aspect adequately. As a result, the tribunal could not conclusively determine the chargeability of excise duty on the intermediate products.

Marketability of intermediate products:
The adjudicating authority contended that the high purity and batch-wise production of the intermediate products indicated marketability. However, the tribunal observed that the authority did not consider the evidence presented by the appellants regarding the non-existence of these products in the market. The tribunal emphasized the lack of findings on the evidence provided by the appellants, making it challenging to determine the marketability of the products. Ultimately, the tribunal could not establish whether the intermediate products were marketable or not due to insufficient evaluation by the adjudicating authority.

Time-barred demand of duty:
The appellants argued that the demand for excise duty was time-barred since there was ongoing correspondence with the Revenue regarding the classification of the intermediate products. They claimed that the Revenue was aware of the manufacturing process and there was no suppression of material facts. The tribunal agreed with the appellants, noting the extensive communication between the parties and the uncertainty in classifying the products as late as 1988. As a result, the tribunal found that the demand for duty for the relevant period was time-barred and set aside both the duty demand and the penalty imposed. The tribunal concluded that the invocation of a larger limitation period was unwarranted in this case.