1999 (4) TMI 159 - AT - Central Excise

Issues Involved:

1. Marketability of Crayplas Compound.
2. Classification of Crayplas Compound under the Central Excise Tariff.
3. Applicability of the Tribunal's judgment in Luxor Pen Co.'s case.
4. Limitation period for demand of duty.

Detailed Analysis:

1. Marketability of Crayplas Compound:

The appellants argued that Crayplas Compound is not marketable as it is a proprietary formulation not ordinarily bought and sold in the market. They emphasized that the compound is marketed in specific shades and compared it to the Luxor Pen Co. case where the imported product was in a different form. The department countered by citing the Supreme Court's judgment in Moti Laminates, which clarified that for goods to be excisable, they must be marketable or capable of being marketed. The department presented evidence of similar goods being imported by Luxor Pen Co. as proof of marketability. The Tribunal referred to several Supreme Court judgments, including U.O.I. v. Delhi Cloth and General Mills, Union Carbide India Ltd. v. U.O.I., and Bhor Industries Ltd. v. C.C.E., which emphasized that goods must be capable of being sold in the market to be considered excisable. The Tribunal concluded that the department had discharged its burden of proving marketability based on the importation evidence provided.

2. Classification of Crayplas Compound under the Central Excise Tariff:

The appellants contended that Crayplas Compound should be classified under Heading 9609.00, which carries a nil rate of duty, rather than under sub-heading 3204.19 as alleged by the department. They argued that the compound had acquired the essential character of the final product (crayons) and should be classified accordingly. The department argued that the product should be classified under Chapter 32 as a colouring preparation, referencing the Tribunal's judgment in Luxor Pen Co.'s case. The Tribunal noted that the classification issue was not fully addressed by the lower authority and remanded the case for re-determination of the correct classification, considering the competing entries in Chapter 96.

3. Applicability of the Tribunal's Judgment in Luxor Pen Co.'s Case:

The appellants argued that the Luxor Pen Co. case was not applicable as it dealt with competing entries in Chapters 32 and 39, while their case involved Chapter 96. The department maintained that the principles from the Luxor Pen Co. case were relevant, as both cases involved colouring preparations. The Tribunal acknowledged the need to consider the specific facts of the case and remanded the matter to the lower authority for a detailed examination of the appropriate classification under Chapter 96.

4. Limitation Period for Demand of Duty:

The appellants argued that the demand was barred by limitation, as the department had been aware of their manufacturing process since 1988 and had not raised any objections. The department contended that there was no proper intimation other than the classification list filed, and the goods should be treated as provisionally assessed. The Tribunal decided not to address the limitation issue directly and remanded it to the adjudicating authority for reconsideration in light of the re-determined classification.

Conclusion:

The Tribunal concluded that Crayplas Compound is marketable based on the evidence of similar goods being imported. The classification issue was remanded to the lower authority for re-determination, considering the appropriate entries in Chapter 96. The limitation issue was also remanded for reconsideration based on the re-determined classification. The Tribunal emphasized the need for a detailed examination of the facts and applicable legal principles by the lower authority.

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