9911796707
TMI Blog1998 (10) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellants filed classification sometime in March, 1986 in which they had submitted short write ups clearly showing that quinoxalinol and P.C. acid were used in the manufacture of the said final products namely Agrophos and Agrofen . The classification list was approved by the proper officer by letter dt. 15-10-86. Subsequently, appellants were served with a show cause notice alleging that the said intermediates were chargeable to duty in respect of the periods mentioned therein. Four such show cause notices were issued on 6-11-1987, 24-2-88, 14-7-88 and 18-10-88. However, none of them alleged that the appellants had suppressed or mis-stated any fact with respect to the said intermediates. Finally, on 3rd April, 1989 another show cause notice was issued by Collector of Customs Central Excise, Vadodara demanding duty amounting to Rs. 36,12,740.39 in respect of the said two intermediates for the period 1-3-86 to 31-7-87 alleging suppression of relevant facts and invoking proviso to Section 11A(1) for the extended period. 3. The appellants replied to the show cause notice on 11-7-89 denying the allegations. In the adjudication proceedings which followed the Collector of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in cases where goods are not marketed in view of the highly unstable character of the goods resulting in fermentation even if kept for a day or two, if they can be marketed they were articles which are goods though one had to take a practical approach. The ld. JDR submitted that both the intermediate products, namely, quinoxalinol and P.C. acid were well defined organic chemicals having definite molecular formula and molecular weight and were normally identifiable products. However, in order to ascertain whether the said intermediate products were goods attracting Central excise duty the test of marketability had to be applied and once it is shown that they are known in the market, actual sale is not necessary as had been held by the Supreme Court in the case of Bhor Industries (Supra). JDR further submitted that as per the affidavit filed by Dr. A.M. Malte, Research Manager, which was on record, and which was relied on by the appellants, the Research Manager had stated that intermediate products namely, quinoxalinol and P.C. acid comes into existence as manufactured identifiable products. The Affidavit had only stated To the best of my knowledge P.C. acid and quinoxalinol are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulverised. USE OF AGROZIM : Agrozim is systematic fungicide for fruits ornamentals and dresser for oil seeds. For GUJARAT INSECTICIDES LTD., Sd/- WORKS MANAGER. Only later, when investigations were made it became clear that the production of intermediate products having different characteristics and marketability had been produced by appellants. It is also seen from the affidavit to Dr. Malte that P.C. acid was isolatable and had sufficient shelf life to enable it to be marketable. In view of the above, we find no legal or other infirmity in the impugned Order. The Appeal is therefore rejected. Sd/- (A.C.C. Unni) Member (J) [Contra per : S.K. Bhatnager, Vice-President]. - With due respects to Hon ble Member (J) my views and orders are as follows : 8. In my opinion since the appellants had submitted their write-ups clearly showing that quinoxalinol and P.C. acid were used in the manufacture of the final products Agrophos and Agrofen and the classification list was approved by the proper officer and the show cause notices that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products which are not marketed at present and Dr. Trivedi s letter stating that P.C. acid is a well defined single organic compound are important factors which are also required to be kept in view. The point however, for our consideration is that whether during the course of process of manufacture adopted by the appellants, these items merely get generated and utilised during a continuous process which results in the production of final product(s) or are isolated and manufactured as a marketable product or by products which were subjected to captive consumption but were otherwise saleable as such, in the form in which they are isolated in the present case. The process of manufacture of Agrofen and Agrozim reproduced in the statements dated 11-3-86 does not make this position clear. Although it interestingly notes that FENVALERATE is a solvent (used as insecticide) which is manufactured from the phenyle acetic acid and similarly Agrozim (CABENBANZIM) is produced from calcium cynamide and used as a fungicide. 13. In view of the above discussion, I consider that the impugned order is required to be set aside and the matter required to be remanded for de novo considerations in the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that P.C. acid was a well recognised organic chemical and had specific uses and was known in the market as such. The appellants themselves had admitted that it was marketable. He submitted that the fact that in the present case the appellants used the chemical for their captive consumption was of no avail for the excisability and for the duty liability of the product. The P.C. acid was goods for the purposes of central excise law. The assessee had suppressed the facts with regard to the manufacture of P.C. acid. He pleaded for the acceptance of the order proposed by the ld. Member (J). 18. I have carefully considered the matter. From the facts on record, It is seen that the product P.C. acid is an identifiable, recognised and marketable organic chemical. It has a definite name and a definite use. Admittedly, it is obtained at the fourth stage of production of the insecticide Agro Fen (Fenvalerate) technical 90%. The appellants had admitted that the P.C. acid was isolatable and was an organic chemical. The plea that it was not actually isolated by them for lack of requisite facilities is not material. The appellants had referred to the process of manufacture adopted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .L.T. 280 (S.C.)]. The Supreme Court s decision in the case of Bhor Industries Ltd. v. Collector of Central Excise - [1989 (40) E.L.T. 280 (S.C.)] had come up for consideration before the Apex Court in the case of Andhra Pradesh State Electricity Board v. Collector of Central Excise, Hyderabad - [1994 (70) E.L.T. 3 (S.C.)]. The question in the case of Bhor Industries Ltd. was whether the crude PVC films manufactured by the appellants therein were goods within the meaning of Section 3 of the Central Excise Act, 1944. The crude PVC films represented an intermediate product used for captive consumption in the manufacture of leather cloth, laminate jute, mattings and PVC tapes. It had been found by the appellate Collector on the material produced by the appellants that crude PVC films were not marketable products. The Revenue could not produce any material establishing the contrary. It was on this basis that the Supreme Court held that the crude PVC films were not marketable and not being goods known to the market, they could not be treated as goods for the purposes of Section 3 of the Central Excise Act, 1944. 23. In that decision in the case of Andhra Pradesh State Electricit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to the Department along with the classification list. No part has been suppressed by us. There has been no deliberate and/or wilful and/or any intent to evade payment of a Central Excise Duty since according to us no duty is payable towards these products. We deny that we have illicitely manufactured and/or removed for captive consumption P.C. Acid and/or Quinoxalinol during the period 1st March, 1986 to 1st March, 1987. The question, therefore, of our not observing the prescribed Central Excise formalities could not and would not arise. A reference has been made to the write-up dated 11-3-86 and it is seen that while there is a reference to the P.C. acid as the starting material for the manufacture of Agrofen, nowhere it has been declared in the classification list or elsewhere that the appellants were engaged in the manufacture of P.C. acid. After analysing the defence placed by the appellants, the adjudicating authority in para 11.8 of his order had stated as under :- 11.8 The law requires the manufacturer to furnish complete and correct information in the documents such as declaration of price list and classification list filed by him before the proper officer and if h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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