1998 (7) TMI 217 - AT - Central Excise

Summary

Issues:
1. Liability of Sand Blocks to Central Excise duty under Heading 68.07
2. Applicability of extended period for demand
3. Marketability of sand blocks and classification as "goods"
4. Burden of proof on marketability and applicability of duty
5. Interpretation of works contract and liability for taxes and duties
6. Relevance of cum-duty price in determining dutiability

Analysis:

Issue 1: Liability of Sand Blocks to Central Excise duty under Heading 68.07
The appeal contested the imposition of Central Excise duty on sand blocks produced by the appellants under Heading 68.07. The Collector of Customs and Central Excise had confirmed a demand for duty and imposed a penalty based on the order-in-original. The tribunal examined the nature of the sand blocks, their composition, and the applicability of the duty under the relevant heading.

Issue 2: Applicability of extended period for demand
The tribunal considered the timeline covered by the demand, which ranged from 5-10-1988 to 10-10-1990. The question of invoking the extended period for demand was raised, and the tribunal analyzed the validity of the extended period in the context of the case.

Issue 3: Marketability of sand blocks and classification as "goods"
The appellants argued that the sand blocks were not marketable goods, emphasizing their specific use in a civil engineering contract for the construction of an Ash-Bund. They contended that the burden of proof regarding marketability rested with the department, citing the lack of market enquiry and evidence supporting the marketability of the sand blocks.

Issue 4: Burden of proof on marketability and applicability of duty
The tribunal examined the principles established in previous decisions regarding the burden of proof on marketability. It was highlighted that the department failed to demonstrate market enquiries or evidence of marketability, leading to the conclusion that the sand blocks did not qualify as goods chargeable to duty under the relevant classification.

Issue 5: Interpretation of works contract and liability for taxes and duties
The tribunal analyzed the terms of the contract between the appellants and the contracting party, emphasizing the allocation of responsibilities, including taxes and duties, as specified in the contract. The nature of the contract, whether a works contract or a sale of goods, was a crucial aspect in determining the liability for duties on the products arising from the contract.

Issue 6: Relevance of cum-duty price in determining dutiability
The tribunal addressed the argument regarding the valuation of products based on a cum-duty price and its implications on the dutiability of the sand blocks. The tribunal considered the consistency of the appellants' stance regarding the valuation of products and their liability for duties, emphasizing the need for coherence in the valuation and dutiability aspects.

In conclusion, the tribunal found merit in the appellants' arguments regarding the marketability of the sand blocks, leading to the set aside of the impugned order-in-original. The appeal succeeded on its merits, and consequential relief was granted based on the findings of the tribunal.