2000 (3) TMI 510 - AT - Central Excise

Issues Involved:
1. Excisability of Monomethyl Chloro Acetocetamide (MMACL).
2. Marketability of MMACL.
3. Captive consumption and its relevance to excisability.
4. Time-barred demand for duty.

Issue-wise Detailed Analysis:

1. Excisability of Monomethyl Chloro Acetocetamide (MMACL):
The primary issue in both appeals is whether MMACL, an intermediate product arising during the manufacture of pesticides like Monocrotophos (MCP), is excisable. The respondents argued that MMACL is not a stable or marketable product in its intermediate form and thus should not be subject to excise duty. The Adjudicating Authority in both cases accepted this argument and held that MMACL is non-excisable, leading to the appeals by the Revenue.

2. Marketability of MMACL:
The respondents contended that MMACL produced during their manufacturing process is not a stable compound and cannot be stored for more than 2-3 days. They argued that the MMACL available in the market is in the form of flakes, which is not the form they produce. The Chief Chemist's report supported this, stating that MMACL in its intermediate form as produced by the respondents is not marketable and requires further processing to attain stability and marketability. The Department failed to provide evidence that MMACL in its intermediate form (either in toluene solution or centrifuged wet cake) is marketable. The Tribunal concluded that the MMACL produced by the respondents could not be equated with the commercially available MMACL in flake form or in DCE solution, thus supporting the respondents' contention of non-marketability.

3. Captive Consumption and Its Relevance to Excisability:
The Revenue argued that the test of marketability is irrelevant for products consumed captively. However, the Tribunal disagreed, citing several Supreme Court decisions that the criterion of marketability applies even to captively consumed products. Since the Department did not prove that the MMACL produced by the respondents met the marketability test, the Tribunal upheld the Adjudicating Authority's decision that MMACL is non-excisable.

4. Time-barred Demand for Duty:
In one of the cases, the respondents also contested the demand on the ground of being time-barred. However, since the appeals were decided on the primary ground of non-excisability due to non-marketability, the Tribunal did not delve into the issue of whether the demand was time-barred.

Conclusion:
The Tribunal concluded that the Department failed to establish the marketability of MMACL produced by the respondents in its intermediate form. As a result, the product was deemed non-excisable. The appeals by the Revenue were rejected, and the orders of the Adjudicating Authority were upheld. The Tribunal did not find it necessary to address the binding nature of the instructions contained in the Ministry of Finance letter dated 4-7-1991, as the appeals were resolved on the primary ground of marketability.

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