2000 (5) TMI 414 - AT - Central Excise

Summary

Issues:
1. Pre-deposit of duty amount and personal penalty confirmed by the Commissioner of Central Excise.
2. Classification of hotmelt wax under sub-heading No. 3404.00 and marketability of the product.
3. Bar of limitation regarding the notice.
4. Entitlement to Modvat credit of duty paid on paraffin wax.

Analysis:

1. The primary issue in this case pertains to the pre-deposit of duty amount and personal penalty confirmed by the Commissioner of Central Excise. The appellants contested the confirmation of duty on hotmelt wax, arguing that it arises at an intermediate stage of manufacturing and is not commercially known as wax in the market. The appellants emphasized that the hotmelt wax is exclusively used at an intermediate stage and is not a marketable product. They highlighted the absence of evidence from the Revenue proving the marketability of the product. The Tribunal noted the appellants' contention and observed that the onus to prove marketability lies with the Revenue. Referring to a previous Tribunal order, the Tribunal found in favor of the appellants, allowing the stay petition unconditionally due to the lack of evidence supporting the marketability of hotmelt wax.

2. Another significant issue raised was the classification of hotmelt wax under sub-heading No. 3404.00 and its marketability. The appellants argued that the hotmelt wax used in manufacturing wax quoted wrappers is not marketable as it cannot be bought or sold in the market at that stage. The Commissioner opined that the mere captive use of the wax does not negate its marketability. However, the Tribunal disagreed, emphasizing that the Revenue failed to provide evidence of the product being marketed by any manufacturer or capable of being marketed. The Tribunal sided with the appellants, stating that they had a good prima facie case, especially considering the limitation period for the demand and the entitlement to Modvat credit on paraffin wax.

3. Regarding the issue of the notice being barred by limitation, the appellants argued that the entire process of wax quoting was known to the department, indicating a delay in issuing the notice. The Tribunal acknowledged this argument, along with the appellants' right to claim Modvat credit on the duty paid for paraffin wax. These factors, combined with the lack of evidence supporting the marketability of hotmelt wax, led the Tribunal to allow the stay petition unconditionally, highlighting the prima facie nature of the matter favoring the appellants.

In conclusion, the Tribunal's judgment in this case revolved around the marketability of hotmelt wax, the classification under sub-heading No. 3404.00, the limitation period for the notice, and the entitlement to Modvat credit. The Tribunal found in favor of the appellants, emphasizing the lack of evidence from the Revenue to establish the marketability of the product, ultimately allowing the stay petition unconditionally.