1998 (8) TMI 295 - AT - Central Excise

Summary

Issues:
1. Whether the intermediate product D-2 Aminobutanol Hemitartrate is excisable and chargeable to duty.
2. Whether the Board correctly considered the Chief Chemist's opinion in the appeal proceedings.
3. Whether the intermediate product is marketable and therefore excisable.

Analysis:

Issue 1:
The case involved the manufacturing of Ethambutol Hydrochloride where an intermediate product, D-2 Aminobutanol Hemitartrate, was formed. The Central Excise Officers issued a show cause notice stating that the product is excisable, and duty had not been paid on it. The Collector of Central Excise, Baroda initially dropped the proceedings, deeming the product not marketable. However, the Chemical Examiner's report stated that D-2 Aminobutanol Hemitartrate is a well-defined single organic compound, falling under Chapter 29, and therefore chargeable to duty. The Board found the impugned order legally incorrect based on various reasons, including the product's stability and commercial nature.

Issue 2:
The Board considered the Chief Chemist's opinion in the appeal proceedings, leading to a dispute. The Revenue argued that the product is stable and marketable, contrary to the lower authority's finding. However, the respondents contended that the Chief Chemist's opinion, obtained after the Collector's order, should not have been considered by the Board. The respondents relied on Section 35E, stating that the Board could only review the adjudication order based on existing records, not additional post-order material. The Board's reliance on the Chief Chemist's opinion was deemed incorrect in law.

Issue 3:
The crucial question revolved around the marketability of the intermediate product. The Board's order lacked substantial evidence to prove the product's marketability. The Tribunal noted that the material presented did not establish the product's marketability, even though it was a well-defined single organic compound. Relying on the Apex Court's decision in the case of Moti Laminates, the Tribunal concluded that the product was not excisable due to insufficient proof of marketability, rejecting the Revenue's appeal.

Overall, the Tribunal emphasized the importance of demonstrating a product's marketability to levy excise duty, highlighting the legal complexities surrounding the classification and taxation of intermediate chemical compounds in the manufacturing process.