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TMI Blog2008 (6) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... nd imposes a penalty of Rs. 1.5 Crores apart from charging interest for the period January, 2000 to March, 2003. 3. The appellants manufacture Fourdrinier Synthetic Wire Cloth (FWC) which is used in paper making machines. FWC manufactured by the appellant is classifiable under Chapter 59 (under Heading No. 59.09 prior to 1995 Budget and Heading No. 59.11 thereafter). The appellants are paying appropriate Central Excise Duty on FWC and there is no dispute in this regard 4. FWC is manufactured from Polyester yarn. Polyester Yarn is woven on the looms to produce Woven Greig fabric. The greig fabric is heat treated on a machine with plain rollers. Such heat treated fabric is cut to size and then joined together by splicing/seaming, after which it is subjected to final heating/calendering and finishing process like trimming and then the finished FWC is packed and cleared on payment of duty under Chapter 59. 5. The woven greig fabric produced during the manufacture of FWC is classifiable under Heading 54.08 and is exempt from duty and in respect of the same, no dispute has arisen. However, in respect of the heat treated fabric, before it is processed into FWC, the impugned de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heat setting is relatable to manufacture of the end product viz FWC Hence it is not a process in relation to manufacture of any intermediate product (f) During the material period the impugned goods were exempt from additional duty under the following notifications:- Sl. No. Notification No. Period (a) 296/79 July, 1990 to 1-3-1994 (b) 28/94 1-3-94 to 16-3-95 (c) 69/95 16-3-95 to 23-7-1996 (d) 22/96 23-7-96 to 31-3-03 As such, even if the impugned goods are held to be chargeable to additional duty, the same is required to be exempted under the aforesaid notifications as the impugned goods were consumed within the factory of production. 7. The ld. Advocate fairly states that the demands have been raised within the normal period of time and therefore the question of limitation has not arisen in this case. However, he points out that the duty demands were raised following an audit objection and since the audit objection has been settled, the demands are required to be dropped. 8. Shri Vineet Ohri, ld. Jt. CDR appearing for the Department strongly supports the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed as manufactured goods and hence excisable. In any case, the very same goods have been held also to be marketable in the case of the appellants vide the Tribunal's order (cited supra) and reported in 2003 (154) E.L.T. 288. 9. We have carefully considered the detailed arguments from both sides, the case records as well as the cited decisions. The issue involved in this case is whether the woven greig fabrics subjected to the process of heat setting and which is produced at an earlier stage than the production of the end-product (FWC) is chargeable to additional duty of excise under the 1957-Act during the relevant period and whether the demands confirmed are sustainable. There is no doubt that the end-product (FWC) is chargeable to duty under Chapter 59 and that the same has discharged the duty liability before being cleared to paper factories and for export. There is also no dispute that the end-product (FWC) is not chargeable to additional duty of Excise under the 1957-Act as stated by the ld. Sr. Advocate. 10. The impugned goods which arise at a stage prior to production of the end-product FWC is internally consumed. The argument by the appellants that there is no sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is a far from satisfactory way of dealing with tax payers in a modem democracy. We hope that the Department will take necessary action against the defaulting officers apart from putting in a system in place where S.C.Ns are issued after proper scrutiny at a sufficiently higher level especially in the light of various judicial pronouncements which place lot of importance on the text of the Show Cause Notices. 12. However, having said that, we have given serious thought to the question as to whether for the lapses and carelessness of the officials issuing the impugned Show Cause Notices, the cause of the Public Revenue should irreparably suffer with no hope of recovery of such huge amounts of Revenue from the salaries of the defaulting officials. Fortunately, as far as the present Show Cause Notices are concerned, the provisions of the basic law i.e. the Central Excise Act, 1944 as well as the Central Excise Rules, 1944 which are applicable by reference to levy and collection of the Additional Excise Duty under the 1957-Act have been invoked. Moreover, both the enactments the 1944-Act and the 1957-Act operate in the same field viz, excise duty on manufactured goods as pointed o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y strongly challenged that the impugned goods are only in process material, unfinished goods and are not in the nature of excisable goods on which additional duty of excise can be levied. In various pronouncements of the Hon'ble Supreme Court, it has been held that for a product to be excisable, it must meet the twin test of manufacture and marketability. For example, we may refer to the decision of the Hon'ble Supreme Court in the case of Laljee Godhoo Co. (cited supra). No doubt the ld. Jt. CDR has successfully argued that in view of the legislative amendments to bring in various processes into the ambit of the term "manufacture" as has been upheld in the decisions of the Constitution Bench of the Hon'ble Supreme Court in the cases of Empire Industries (cited supra) and Ujagar Prints (cited supra), the impugned goods having, undergone the process of heat setting are to be held to be manufactured goods. However, it is not enough that the impugned goods should meet the test of manufacture alone. It has also to meet the test of marketability. Ld. Jt. CDR has again argued that in the appellant's own case, for the preceding period, the Tribunal had held the very same goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e market and therefore it held the goods to be marketable. 17. The ld. Jt. CDR wants us to follow the ratio of the Tribunal's decision as above reported in 2003 (154) E.L.T. 288 (Tri-Kolkata) - SWIL Ltd. v. Commr. of C.E. as the said order has not been stayed or reversed by the Hon'ble Supreme Court. However, with great respect to the Bench that passed this order, we are constrained to observe that the said Bench proceeded to decide the issue casting the burden to prove marketability on the appellants and did not accept submissions of the appellants in this regard saying that the appellants had made a bald statement without giving any reasons. Secondly, we also find that the Bench has passed its order relying on its own opinion that "Fabrics made of polyester yarn is not such a product which cannot be brought to market for being bought and sold". In this regard, we observe that the ld. Sr. Advocate has cited a number of decisions of the Hon'ble Supreme Court which cast the burden to prove marketability on the Department. In F.G.P. Ltd. (cited supra), it was held by the Hon'ble Supreme Court that the goods are marketable is to be proved by Revenue and that in the absence ..... 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