1999 (12) TMI 160 - AT - Central Excise

Summary

Issues:
Exemption from duty on compound rubber under specific notifications during a certain period - Determination of marketability of compound rubber for excisability - Opportunity for appellants to substantiate claim of non-marketability - Request for remand for de novo decision by Commissioner of Central Excise.

Analysis:
The case involved three appellants engaged in manufacturing rubber tyres, inner tubes, and compound rubber for tyres under Chapter 40 of the Central Excise Tariff Act, 1985. Compound rubber was previously exempt from duty under specific notifications, but a dispute arose for the period when no exemption was in force. Show cause notices were issued proposing duty recovery on compound rubber during this period. The appellants requested deferral of adjudication pending a government decision on issuing a new notification. The matter was pending until a personal hearing in September 1997, where the appellants argued against the duty imposition based on marketability and historical exemptions.

The main contention revolved around the marketability of the compound rubber. The appellants argued that the product was not marketable due to its short shelf life and specific use by a particular tyre manufacturer. They presented evidence, including a certificate from the Indian Rubber Institute and technical details regarding the product's characteristics affecting marketability. The appellants sought a remand for a fresh opportunity to substantiate their claim of non-marketability, emphasizing the need for a detailed analysis and consideration of technical literature.

The Tribunal considered the arguments and evidence presented by both parties. While acknowledging that the appellants failed to fully support their claim of non-marketability during the initial adjudication, the Tribunal emphasized the importance of a correct determination on the excisability of the product. Recognizing the appellants' contentions regarding the unique characteristics of the compound rubber and the proximity of manufacturing units, the Tribunal deemed it appropriate to remand the case to the Commissioner of Central Excise for a de novo decision. The Commissioner was instructed to allow the appellants a reasonable opportunity to present their case, conduct sample analysis, and issue fresh orders in accordance with the law.

In conclusion, the Tribunal set aside the previous orders and allowed the appeals by remanding the case for a comprehensive reevaluation of the marketability of the compound rubber and its excisability, ensuring a fair opportunity for the appellants to substantiate their claims and present relevant evidence before a new decision is made by the Commissioner of Central Excise.