1997 (3) TMI 344 - AT - Central Excise

Summary

Issues: Classification of rubber compound for excise duty, marketability of the product

Classification of rubber compound for excise duty:
The appellants, manufacturers of rubberized textile fabrics, faced a dispute regarding the classification of the rubber compound they manufactured for their products. The department contended that the rubber compound fell under Tariff sub-heading 4005.00, attracting a 40% ad valorem Central Excise duty. The adjudicating authority confirmed this classification and the duty amount proposed in the show cause notice. The appellants challenged this decision before the Tribunal, arguing that the rubber compound was not marketable and used captively, thus not qualifying as excisable goods. The Tribunal analyzed the process of manufacturing the rubber compound and relevant notifications. It noted that the shelf-life of the product was short and that the department had not proven the marketability of the product. Relying on Supreme Court judgments emphasizing the necessity of marketability for excisable goods, the Tribunal held that the product was not liable to duty, allowing the appeal in favor of the appellants.

Marketability of the product:
The key issue revolved around the marketability of the rubber compound manufactured by the appellants. The appellants argued that the product was not marketable as it was used captively and had a short shelf-life of 48 hours. They contended that unless a product is marketable, it cannot be considered excisable goods subject to duty. The department, however, pointed to specific notifications recognizing the product as excisable and providing exemptions based on usage within the factory of production. The Tribunal highlighted the lack of evidence regarding the marketability of the product in the adjudication order and the failure to address whether the product met the criteria of compounded rubber as per the Central Excise Tariff. Citing Supreme Court precedents, the Tribunal emphasized that the burden of proving marketability rested with the Revenue, which had not been fulfilled. Consequently, the Tribunal ruled in favor of the appellants, stating that the product was not liable to duty due to the lack of evidence establishing its marketability. The Tribunal's decision on the excisability of the goods rendered the discussion on limitation raised by the appellants unnecessary, leading to the disposal of the appeal in favor of the appellants.