Machines Vs. Commissioner of Central Excise, Delhi  Insc 256 (21 February 2008)
Bhan & Dalveer Bhandari
O R D
CIVIL APPEAL NO. 2155 OF 2002 Assessee-appellant (hereinafter referred to
as 'the 'assessee') claimed the C.I.Chilled Rolls being manufactured by the
appellant under chapter heading 84.37 which in turn is exempted from the
payment of excise duty vide exemption Notification No.56/95-CE dated 16.3.1995.
cause notice dated 27th
September, 1996 was
issued to the assessee alleging that the assessee first manufactures C.I.castings
which are later on captively consumed for producing the C.I.Chilled Rolls; that
since the assessee was producing intermediary product, it was liable to pay the
excise duty on the C.I.castings under chapter heading 7207.10.
in reply to the show cause notice had taken the point that C.I.castings which
are intermediary product were not marketable and, therefore, excise duty could
not be levied.
to the assessee, C.I.castings are in the process of manufacturing C.I.Chilled
APPEAL NO.2155 OF 2002 -2- The adjudicating authority in its order dated
29.1.1999 recorded a finding to the following effect:
the circulars issued by Board as mentioned above do not speak anything about
marketability of castings and as such marketability of castings have got no
bearing on the classification of the product. Even otherwise the castings
manufactured by the market are capable of being sold in the market."
being aggrieved, filed appeal before the appellate authority. Appellate
authority in its order dated 20th February, 2001 reiterated the finding recorded by the adjudicating authority and held
also observe that the appellants in para 3.1 of their grounds of appeal have
stated that these castings were sold to the customers who placed orders for the
same and not in the open market. Even where the goods are manufactured as per
the specifications and the requirements of a customer, the same satisfy the
criteria of the marketability."
Tribunal has not recorded any finding regarding marketability of the
intermediary product i.e. C.I.castings. Counsel appearing for the assessee very
fairly concedes that if the intermediary product is marketable, then the excise
duty would be payable because the final product i.e. C.I.Chilled Rolls is CIVIL
APPEAL NO.2155 OF 2002 -3- exempted from payment of excise duty. Since, there
is no finding recorded by the Tribunal regarding marketability, excise duty
could not be levied on the intermediary product i.e.
Counsel for the assessee relied upon a number of judgments to contend that
unless the intermediary product is marketable, excise duty could not be levied.
(cases referred: Union Carbide India Ltd. vs. Union of India & Others
reported in (1986) 2 SCC 547; Gujarat Narmada Valley Fertilizer Co. Ltd. vs.
Collector of Excise & Customs reported in (2005) 7 SCC 94).
absence of any finding recorded by the Tribunal regarding marketability, we are
handicapped and cannot proceed with the case any further. Accordingly, we
accept this appeal; set aside the impugned order of the Tribunal and remit the
case to the Tribunal for passing a fresh order in accordance with law including
the point regarding marketability of the intermediary product i.e. C.I.castings.
All contentions are left open.