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TMI Blog2024 (6) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Apex Court held that the goods would be exigible to excise duty only if it is proved that they are marketable. The burden lies on the department to demonstrate that the goods are marketable. The Tribunal in the case of M/S. NEEDLE INDUSTRIES (INDIA) PVT. LTD. VERSUS CCE, SALEM [ 2017 (4) TMI 1219 - CESTAT CHENNAI] had occasion to consider a similar issue. The goods in question was Gold Potassium Cyanide solution and the issue considered was the marketability of this item. It was brought out from evidence that the said item is not only highly poisonous because of the presence of its cyanide molecule, but also unstable. The Tribunal held that the goods cannot be said to be marketable. The intermediate goods namely polyester / nylon / cotton rove twisted yarn are not marketable items. This issue is answered in favour of the assessee. Classification of intermediate products - HELD THAT:- The issue of marketability is decided in favour of assessee. Only if the goods are marketable, they fall into the definition of excisable goods. The levy of excise duty is attracted only for manufacture of excisable goods. As we have already held that the goods are not marketable and therefore not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated 17.01.1989 proposing re-classification of the goods under Sub heading No. 5606.00 as special yarns and raised a demand for differential duty of Rs. 9,21,130/- (Basic Excise Duty) and Rs. 22,890/- (Special Excise Duty) total duty of Rs.9,44,020/-. After adjudication, the original authority re-classified the goods under Sub heading No. 5606.00 and confirmed the differential duty as proposed in the show cause notice for the period from 9/86 to 12/88, as per Order-in-Original No.53/89 dt 28.03.1989. 4. Against such finalization of the provisional assessment the appellant filed appeal before the Commissioner (Appeals) and vide OIA No.165/89, the Commissioner (Appeals) held that, the goods are excisable but would merit classification appropriately under Heading No. 54.04 of Central Excise Tariff Act 1985 and would be eligible for exemption under Notification No. 53/87 dated 01.03.87. The classification of the goods was thus modified to be under Heading No. 54.02 by issuing a Corrigendum dated 04.01.1990. 5. Against this order passed by the Commissioner (Appeals), the department filed appeal before the Tribunal (CEGAT). After hearing of the appeal, the Tribunal passed Final Order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above order passed by Tribunal, the Assistant Commissioner vide Order in Original dated 23.08.2012, held that the goods are marketable and held that goods are classifiable under Heading No. 56.06. The demand of duty proposed in the show cause notice was confirmed. The Assistant. Commissioner also imposed equal penalty to the duty confirmed under Section 11 AC read with relevant Rules. The proceedings in respect of the demands for the period October 1996 to July 1997 was dropped. 10. Against the above order of confirming the demand and imposition of penalty, the appellants filed appeal before Commissioner (Appeals). As per order impugned herein dated 25.10.2013 the Commissioner (Appeals) upheld the order passed by the adjudicating authority. Hence, the appellants are before the Tribunal in the third round of litigation. 11. The Ld. Counsel Shri. J. Shankarraman, appeared and argued for the appellant. It is submitted that, the appellant interalia manufactured and cleared intermediate products namely Polyester cotton rove twisted yarn and Nylon cotton rove twisted yarn used for 100% captive consumption in the In-house manufacture of their specialty monopoly products namely Polyest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein had opted not to sell the product in the market and the Hon ble Court observed that the said option cannot be construed to mean that the goods are not capable of being bought or sold. Moreover, the contention of the appellant therein that the goods do not have any shelf-life was also not accepted as it was proved that the goods had shelf-life of 2 to 3 days. It was then observed by the Apex court that the goods are marketable. The question of marketability being a question of fact is to be determined on the basis of facts of each case and there cannot be straight jacket formula. 15. The Ld. Counsel urged that the department has not adduced any evidence to show that the impugned intermediate goods are bought and sold in the market. It is merely alleged that, since the appellant has the monopoly of manufacture of these intermediate products, it cannot be said that the goods are not capable of being marketed. 16. Section 2 (d) of the definition of excisable goods in Central Excise Act 1944 was pointed out by the Ld. Counsel to submit that an Explanation has been added to the definition with effect from 10.05.2008. The definition reads as under:- Section 2 (d) excisable goods mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed equal penalty, under section 11 AC which has been confirmed by the Commissioner (Appeals). The proceedings having been emanated from a provisional assessment, there was no occasion to allege any violation of law so as to impose penalty. It is submitted that, the confirmation of duty or the penalty imposed cannot sustain. The Ld. Counsel prayed that the appeal may be allowed. 22. The Ld. AR Shri. M. Selvakumar appeared and argued for the department. The findings in the impugned order was reiterated. Para 11 to 14 of the impugned order was adverted to by the Ld. AR to submit that the appellant has the monopoly of manufacturing these intermediate products. Only for this reason these goods are not available in the market. It does not take away the marketability of the goods. The goods are capable of being bought and sold and would thus become excisable goods . The decision in the case of Nicholas Piramal India Ltd., is applicable in the said case as the goods are being capable of bought and sold. This would make the goods excisable goods . The duty demand and penalty is legal and proper. It is prayed that the appeals may be dismissed. 23. Heard both sides. 24. The issues that arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shelf life of at least 2 to 3 days and the Hon ble Apex Court held that the option of the appellant not to sell the goods even though had a short shelf life cannot be make the goods not marketable. The goods were available in the market. Moreover, in the present case, the goods are intermediate products which are cleared to their own unit for being used in manufacture of finished products. The finished products are cleared on payment of duty. 29. In the case of Cimmco Birla Ltd., (supra), the Hon ble Apex Court held that the goods would be exigible to excise duty only if it is proved that they are marketable. The burden lies on the department to demonstrate that the goods are marketable. The relevant para reads as under :- The appellant was getting contract for manufacturing of Railway wagons from the Indian Railways. Inputs for manufacture of these wagons were supplied by the Indian Railways, meaning thereby the appellant was only doing job work. Insofar as Railway wagons are concerned, they are exempted from duty w.e.f. 1-3-1993. The only question as to whether the inputs/parts which were used for manufacturing of Railway wagons are to be subjected to Excise duty. It is not in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Apex Court in the case of Board of Trustees (supra). Added to that, show cause notice exhibits that Revenue has not discharged its burden of proof to bring the goods to be called as marketable and traded commodity . 5. In view of above, adjudication having no foundation in law is liable to be unsustainable for which appeal is allowed. 6. To reach to the above conclusion, we have also been guided by the Apex Court in the case of Cipla Ltd. v. CCE, Bangalore - 2008 (225) E.L.T. 403 (S.C.) holding that manufacture does not ipso facto bring the goods to the fold of excisability without meeting the twin test. 31. The Tribunal in the case of Needle Industries India Pvt Limited (supra) had occasion to consider a similar issue. The goods in question was Gold Potassium Cyanide solution and the issue considered was the marketability of this item. It was brought out from evidence that the said item is not only highly poisonous because of the presence of its cyanide molecule, but also unstable. The Tribunal held that the goods cannot be said to be marketable. The relevant paragraphs read as under:- 7. The literature submitted by learned AR pertains only to solid crystalline form of Gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainable and the appeal is allowed with consequential benefits, if any, as per law. 31.1 From the discussions made above and on the basis of evidence placed before us, we have no hesitation to conclude that the intermediate goods namely polyester / nylon / cotton rove twisted yarn are not marketable items. This issue is answered in favour of the assessee. 32. The second point to be analysed is regarding the classification. The Ld. Counsel has submitted that the appellant is no longer manufacturing these products. Further, the Tribunal while remanding the matter has categorically held that if the goods are not marketable, then the issue of classification has no relevance. The issue of marketability is decided in favour of assessee. Only if the goods are marketable, they fall into the definition of excisable goods. The levy of excise duty is attracted only for manufacture of excisable goods. As we have already held that the goods are not marketable and therefore not excisable goods, the issue of classification is of no consequence and the demand of duty cannot sustain. We therefore set aside the demand of duty confirmed in the impugned order. 33. The next issue is with regard to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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