2017 (1) TMI 1313 - AT - Central Excise

SSI Exemption - Marketability of manufactured product - whether the Tissue Culture Media manufactured by appellant and consumed captively to manufacture anti-rabies vaccine was marketable? - Held that - The sale of the tissue media to Pasteur Institute was only for use in the laboratory and not for manufacture of vaccine and for further sale - The marketability of tissue culture media in the form in which it is, sold is not possible and cannot be contended. Revenue had burden of proof to establish that the goods were marketable. That was not discharged. Being satisfied that the appellant authority has not at all examined the manufacturing activity, excisability and marketability, the appeal is allowed.

Summary

Issues:
1. Whether the Tissue Culture Media manufactured by the appellant and consumed captively to manufacture anti-rabies vaccine was marketable.

Analysis:
The appellate tribunal, consisting of Shri D.N. Panda and Shri Madhu Mohan Damodhar, noted that the appellant did not appear before the court. The issue in question was whether the Tissue Culture Media produced by the appellant, used internally to manufacture anti-rabies vaccine, was marketable. The departmental representative supported the appellate order. Upon hearing both sides and examining the records, it was found that the adjudicating authority had thoroughly assessed the Tissue Culture Media and concluded that, despite meeting the manufacturing criteria, the goods were not excisable as they were not capable of being marketed due to being produced and stored in controlled conditions.

The appellate authority was criticized for not addressing whether the Tissue Culture Media met the legal definition of being manufactured by the appellant. Additionally, it failed to provide evidence regarding the marketability of the goods, especially considering their short shelf life of a few hours. The tribunal emphasized that for goods to be considered marketable, they must be known and traded in the commercial market. The absence of evidence proving marketability led to the conclusion that the goods were not marketable in common trade parlance.

Furthermore, it was noted that an explanation had been added to section 2(b) of the Central Excise Act, 1944, post the relevant period of the appeal, to include the capability of goods being marketable within the legal framework. However, since this appeal pertained to a period before the amendment, the burden of proof rested with the Revenue to establish the marketability of the goods, which they failed to do. The tribunal found that the appellant authority had not adequately examined the manufacturing process, excisability, and marketability of the goods, leading to the allowance of the appeal.

In the final decision, the tribunal acknowledged the sound reasoning provided by the adjudicating authority regarding the nature of the tissue culture media manufactured by the appellant. The authority highlighted various aspects, such as the constituents of the media, its short shelf life, and the specific use within the laboratory setting. It was concluded that since the tissue culture media was not marketable, it did not fall under dutiable products, and therefore, the duty was not recoverable. The extension of the Small Scale Industries (SSI) exemption was also deemed unnecessary due to the non-marketability of the goods.