2000 (3) TMI 576 - AT - Central Excise

Summary

Issues:
1. Duty demand under Section 11A of the Act and penalty under Rule 173Q of C.E. Rules.
2. Excisability of the intermediate product (1.1 Dimethyl Ethyl) Amino methyl-4 Benezyloxy-1-3 Benzene Dimethenol.
3. Burden of proof on the Revenue regarding marketability and excisability of the product.
4. Application of judgments by the Hon'ble Apex Court and Tribunal in similar cases.
5. Allegation of deliberate intention to suppress material facts for evading duty.

Issue 1: Duty Demand and Penalty
The appeal challenged the duty demand of Rs. 2,99,968.48 and penalty of Rs. 12,000 imposed by the Commissioner of Central Excise, Hyderabad under Section 11A of the Act and Rule 173Q of C.E. Rules, based on the non-payment of duty for the intermediate product used in the final exempted product.

Issue 2: Excisability of Intermediate Product
The main contention revolved around the excisability of the intermediate product (1.1 Dimethyl Ethyl) Amino methyl-4 Benezyloxy-1-3 Benzene Dimethenol, with the appellants arguing that it was not stable, not marketable, and hence not liable for duty as it did not meet the criteria of being classified as goods for excisability purposes.

Issue 3: Burden of Proof on Revenue
The learned consultant for the appellants argued that the Revenue failed to discharge its burden of proving the marketability and excisability of the intermediate product. They emphasized that the burden lay on the Revenue to demonstrate that the product was stable, capable of trade, and known in the market, which was not proven in this case.

Issue 4: Application of Judgments
The appellants relied on various judgments by the Hon'ble Apex Court and Tribunal, including cases like CCE v. Chemphor Drugs, Padmini Products v. CCE, and HMM Ltd. and Tamil Nadu Housing Board v. CCE, to support their argument that there was no deliberate intention to evade duty and that marketability was a crucial factor in determining excisability.

Issue 5: Allegation of Suppression
The Commissioner held that there was deliberate suppression of facts by the appellants regarding the intermediate product and its occurrence during the manufacturing process. However, the Tribunal found that the Revenue failed to provide sufficient evidence to prove the marketability of the product, leading to the acceptance of the appellants' plea and the appeal being allowed.

In conclusion, the Tribunal accepted the appellants' arguments, emphasizing the lack of evidence regarding the marketability and stability of the intermediate product, and the failure of the Revenue to discharge its burden of proof. The judgment highlighted the importance of marketability in determining excisability and referenced various legal precedents to support the decision in favor of the appellants.