1999 (11) TMI 678 - AT - Central Excise

Summary

Issues Involved:
1. Shelf life and definition of goods for rubberised cotton cord/fabric.
2. Marketability of rubberised cotton cord/fabric.
3. Classification of rubberised cotton cord/fabric under sub-heading No. 5905.10.
4. Removal of excisable goods without payment of duty and its recoverability under Rule 9(2).

Issue-wise Detailed Analysis:

1. Shelf Life and Definition of Goods:
The appellants argued that the rubberised cotton cord/fabric has a very short shelf life, ranging from a few hours to 24 hours, making it unsuitable for marketability. They supported their claim with affidavits from manufacturers and users, and an expert opinion from Dr. S.N. Chakravarty of the Indian Rubber Institute. The Commissioner dismissed these affidavits, stating that the varying shelf life durations indicated inconsistency. However, the Tribunal found that the affidavits and expert opinion consistently demonstrated a short shelf life, which is insufficient to bring the product to market for sale and purchase. Thus, the Tribunal concluded that the product's short shelf life precludes it from being classified as "goods" under Section 3 of the Central Excise Act.

2. Marketability:
The appellants contended that the rubberised cotton cord/fabric is not marketed but is captively consumed in the manufacture of tyres. They cited several judicial precedents, including the Apex Court's decision in U.O.I. & Others v. DCM, which held that intermediate goods used for captive consumption are not liable to duty if not marketable. The Tribunal observed that the Department failed to provide evidence of marketability. Given the product's short shelf life and captive consumption, the Tribunal determined that the rubberised cotton cord/fabric is not marketable and thus not "goods" for excise duty purposes.

3. Classification Under Sub-heading No. 5905.10:
Since the Tribunal concluded that the rubberised cotton cord/fabric is not "goods," the issue of its classification under sub-heading No. 5905.10 became moot. The Tribunal stated that classification is irrelevant if the product does not meet the definition of "goods" under Section 3 of the Central Excise Act.

4. Removal of Excisable Goods Without Payment of Duty:
The Commissioner had confirmed the demand for Central Excise duty and directed the appellants to pay the duty immediately. However, the Tribunal's finding that the rubberised cotton cord/fabric is not "goods" negated the need for duty payment. Consequently, the Tribunal ruled that the question of duty payment does not arise, and the appellants are entitled to consequential relief.

Conclusion:
The Tribunal allowed the appeals, concluding that the rubberised cotton cord/fabric, due to its short shelf life and lack of marketability, does not qualify as "goods" for excise duty purposes. Therefore, the classification under sub-heading No. 5905.10 and the demand for duty payment were dismissed. The appellants are entitled to relief in accordance with the law.