9911796707
TMI Blog1994 (8) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... ce not excisable. 2. Smt. JMS Sundaram, learned DR while arguing for the Revenue, submitted that erstwhile TI 16A(3) refers to piping and tubing of unhardened vulcanised rubber and since the item in question was found tubing of unhardened vulcanised rubber, on chemical analysis, the department was justified in classifying the item and charged to duty under the aforesaid tariff item. She said that the respondents have not denied the chemical examiner s opinion that the product in question was piping and tubing of unhardened vulcanised rubber and since the product is an identifiable product having a distinct character, name and use, the Collector was not just right in dropping the proceedings on the ground that product was not marketed as such. She argued that there is no inherent disability in marketing the product as it was used in captive consumption and it is an excisable product, capable of being bought and sold. The mere fact that it is not actually sold does not make any change in its essential character. Marketability refers to capable of being sold in the market or known in the market as goods as observed by the Supreme Court in the case of Bhor Industries [1989 (40) E.L.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factured product, as the final product is synthetic hose pipe and EPDM rubber lining is only an intermediate item. Evidently it is not bought and sold in the market but only captively consumed and is not marketed as a different product or known in the market to be such. To become excisable goods, the goods must be bought and sold in the market or is capable of being sold or is known in the market as such. If not, the product is non-excisable. He referred to the observations made by the Supreme Court in the case of Bhor Industries Ltd. (supra) and strongly relied upon the decision of the Supreme Court in the case of Collector of Central Excise v. Ambalal Sarabhai Enterprises, 1989 (43) E.L.T. 214 (SC) in support of his contention. 4. In reply, Smt. Sundaram submitted that order passed by the Collector (Appeals) dated 10-3-1987 refers to rubber lining unvulcanised and unhardened rubber and the other order dated 22-4-1987 dealt with reference to new tariff. However, since these two orders concerned for different periods, there is no bar in raising the demand for the period in question in the facts and circumstances of the case. 5. We have carefully considered the arguments advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court in the case of Ambalal Sarabhai Enterprises, 1989 (45) E.L.T. 214 (SC) holding that the duty of excise is on the manufacture of goods and for an article to be goods, these must be known in the market as such or they must be capable of being sold in the market as goods. Actual sale is not necessary. User in the captive consumption is not determinative of that the article is capable of being sold in the market or known in the market as goods. Even transient items of articles can be goods provided that they were known in the market as distinct and separate articles having separate uses, there would till become goods if they were capable of being marketed even during the said short period. Thus the goods with unstable character can be theoretically marketable if there was a market of such transient type of articles but one has to take a practical view on the basis of available evidence. 6. Following the ratio of the aforesaid decisions and taking into consideration that Revenue has not adduced any evidence to show that it was sold or has been marketed by any one and there was no market enquiry by the Revenue in this regard, we are of the view that item in question w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading. In the circumstances, it was necessary on the part of the respondents to declare the item as in the Classification List under excisable category, even if they were of a different opinion. They could of course record their protest in the prescribed way, but it was not open to them to clear or use this item without so declaring it and without complying with the procedural provisions of Central Excise or completing the prescribed formalities. 11. It is also significant that the respondents had not challenged the above opinion of the Chemical Examiner. 12. As regards the respondents contention that the item was only an intermediate product and was not liable to excise duty, I find again the reliance placed by them and the learned Collector (Appeals) in the cases cited by them namely the Supreme Court judgment in the case of D.C.M. Co. Ltd., 1977 (1) E.L.T. (J 199) (SC) = AIR 1963 SC 791 and South Bihar Sugar Mills v. U.O.I., 1978 (2) E.L.T. (J 336) (SC) = AIR 1968 SC 922 does not help their cause because the criteria for considering any item as goods is not in dispute nor it is disputed that marketability is an essential test. Furthermore, it cannot be said in general that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... List even after starting the production of unhardened vulcanised tubing specifically mentioned under the Tariff Heading 16A(3) and had not discharged the responsibility in this respect, it was incorrect on the part of the Collector to drop the proceedings. 15. This Tribunal has observed in the case of M/s. Basant Rubber Factory (Pvt.) Ltd. v. Collector of Central Excise, Bombay reported in 1983 (12) E.L.T. 408 (Tri.) = 1983 E.C.R. 301D that rubber tubing of unhardened vulcanised rubber was being manufactured by the appellants was being marketed. (However rubber tubing can be of different varieties and meant for different purposes or uses, no generalised inference could be drawn therefrom.) Similarly, the fact that Notification No. 197/67-C.E. granted exemption to certain types of piping and tubing was also noteworthy. These illustrations are, however significant as they do than that rubber tubing fall under Tariff Heading 1683 and those of specified types were even exempted under Notification No. 197/67 during the period these provisions were in force and both the sides could not but be aware of this position. In the Basant Rubber Factory case (supra), the Tribunal has also obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-V/86, dated 20-1-1986 and sent to the Chemical Examiner, Customs House, Calcutta for test. In the test report of this sample, the chemical examiner opined that it is tubing of unhardened vulcanised rubber. According to this test result of the sample the product is classifiable under erstwhile T.I. - 16A(3) and attracts Central Excise duty at the rate of 25% ad valorem basic and special excise duty @ 5% of the basic duty, during the material time and it was evident that the respondents were manufacturing EPDM rubber tubing of unhardened vulcanised rubber after the date of submission of the Form-I No. 1/84-85 dated 19-1-1985. The Revenue has alleged that the respondents had never intimated the Central Excise Department about such manufacture and did not submit any Form-I in respect of the new product i.e. EPDM rubber tubing unhardened and vulcanised and the same were cleared without payment of duty. Accordingly, Show Cause Notice dated 19th March, 1987 was issued to the respondents asking them to show cause as to why the duty of Rs. 12,96,255.14 on 7,05,445.00 Mtrs. of EPDM Rubber tubing of unhardened vulcanised rubber, falling under erstwhile Item 16A(3) of the Central Excise Tari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... word in its ordinary dictionary meaning, which meaning is that to become goods, it must be something which could ordinarily come to the market to be bought and sold and be known to the market. Applying the said principle, it becomes clear that EPDM lining is neither known to the market nor is an article which is capable of being bought and sold in the market. Thus, EPDM lining is not goods and, therefore, are not excisable goods within the meaning of Sec. 2(d) of CE S Act, 1944. They submitted that Sec. 3 of the Act provides that levy and collection of duty of excise are only on excisable goods defined in section 2(d). In the instant case, therefore, section 3 is clearly not attracted and there cannot, therefore, be any question of levy and recovery of duty of excise. There is no power or authority in law to levy and recovery of any duty of excise on EPDM lining. (iv) The Chemical Report in question itself does not show that a new product with a distinct name, identity or use has emerged. While it is true that some process has gone into the manufacture of the rubber lining which forms a component part of the synthetic hose pipe, it cannot be considered to be fully manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 12th August, 1988 and Board s order dated 9th August, 1989 which was received by the Collector on 21st August, 1989 and Revenue has filed a review application on 3rd October, 1989 and hence, within limitation. She laid special reference to ground of appeal No. (d). She pleaded that it is an intermediary product and would be dutiable if it is obtained by one process and is used for being completed into other product by a separate distinct process whereas in this case, the respondents own admission is that first they manufacture a circular jacket containing polyster spun yarn in the warp and filament yarn in the weft. The EPDM rubber lining is inserted with the help of steam. It is, therefore, evident that EPDM rubber lining and hose pipe are manufactured separately by two distinct process and then bonded into one by a distinct process. She referred to Chemical Examiner s report dated 7-2-1986 and pleaded that the period in dispute is March, 1985 to February, 1986. She pleaded that the respondents did not file any classification list. She referred to Member (Judicial) s order wherein it is stated that Revenue has not adduced any evidence whereas Vice-President has held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SDR, in reply, argued that the facts of the present case are different from the facts of the High Court judgment cited by the learned advocate and it is not relevant. She referred to HSN 40.09 and clearly stated that the goods are not marketable and as such, the case should be remanded. 19. I have heard both the sides and have gone through the facts and circumstances of the case. Before I proceed on the merits of the case, I would like to observe that the present appeal is a review application to be treated as an appeal by the Tribunal and the Board had passed an order on 9th August, 1989 and had directed the Collector in terms of provision under Section 35E(1) of the Central Excises and Salt Act, 1944 for referring the following points to the Tribunal :- (a) whether after taking into consideration the facts stated above the said order of the Collector is legally correct and proper order; and (b) whether, by an order passed under Section 35C of the Act the Tribunal should set aside the order and confirm the demand in full or pass such other order as it may deem fit." The Collector in his grounds of appeal has raised the following issues :- (a) The item mentioned in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in this case. (e) Gujarat High Court in Maniklal Hiralal Spgn. and Weaving Mills v. Union of India [1978 (2) E.L.T. (J 618)] held that intermediary product which is by itself an excisable article is liable to excise duty even though it is not removed from the factory. The rubber tubing or unhardened vulcanised rubber, which is the product in question in this case, is by itself an excisable article and therefore it is leviable to excise duty. (f) The contentions of the Respondent that rubber tubing is not goods is not correct; it has distinct character, name and use. It is an excisable product capable of being bought or sold. The mere fact that it is not actually sold does not make any change in its essential character. If the contentions of the party that because it is not marketed it is not goods is true then the ammunitions supplied to Defence are not goods since they are not sold. Ammunition, as such can be bought or sold. The fact that the ammunition supplied to the Defence is not bought or sold is of little consequence. It is enough if piping and tubing of unhardened vulcanised rubber is a tariff entry in the erstwhile Central Excise Tariff. To say that it is not goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
