Exchange (India) Ltd. Vs. Collector of Central
Excise, Baroda  INSC 237 (2 August 1999)
VENKATASWAMI. & M.JAGANNADHA RAO,J. M. JAGANNADHA RAO, J.
The appellant in these two appeals is the same and the issues arising in both
appeals are also the same. Civil Appeal No. 2110 of 1988 is filed against the
order of the CEGAT(Delhi) dated 2.2.1988 while Civil Appeal
No. 2006 of 1997 is filed against the order of the CEGAT(Delhi) dated 27.2. 1992. In Civil Appeal
No. 2110 of 1988, the facts are as follows:
appellant manufactures Ion-Exchanges and an intermediate product called D.V.B.
beads is consumed in the course of the manufacture of the Ion Exchanges.
dispute was confined to the question as to whether excise duty was leviable on
the intermediate product. Three points arose before the CEGAT. The first was in
relation to whether the said intermediate products were goods which were
marketable, the second was whether they fell within the classification in the
relevant tariff item No.15A(1)(ii) and the third related to limitation. On the
third point, all the three members were agreed that the demand for duty could
not exceed six months preceding the show cause notice. But on the first and
second points there was difference of opinion. One of the members Sri V.P.Gulati
held that the disputed goods were distinct items as compared to the end product
and that they were marketable goods inasmuch as the affidavits produced by the
appellant to the contrary were not acceptable. He also held that unless the
goods were proved by the Revenue to be plastic materials or resins, they could
not be brought under item no. 15A(1)(ii) and the matter required a remand to
the Collector(Appeals) on that question. The other two members (Sri S.D.Jha and
Sri Harish Chander) observed that they had some reservations as to the evidence
produced by the appellant to prove that the beads were not marketable. On the
question of marketability, they held that once these beads fell in the entry 15A(1)(ii),
their marketability was to be treated as no longer in question. As to the OA
classification, they felt no remand was necessary.
intermediate product squarely fell within entry 15A(1)(ii). They therefore
dismissed the appeal subject however to the slight modification as to the
period of limitation on which point they were in agreement with Sri V.P.Gulati.
Against the dismissal of the appeal in the manner as stated above, the
appellant has preferred this appeal.
connected Civil Appeal No.2006 of 1997, the position was that the appellant
contended before the CEGAT that tariff item No.15A(1)(ii) was not applicable
and also that the first appellate authority had not gone into the marketability
of the intermediate product as the said authority did not notice the evidence
produced by the appellant.
so, the Tribunal felt that its judgment dated 2.2.1988 (which is under appeal
in Civil Appeal No. 2110 of 1988) was in point and covered the case against the appellant. (No question
of limitation arose in this case). Following that judgment, the appeal was
these appeals, we have heard the learned senior counsel for the appellant Sri
Joseph Vellapally and the learned counsel for the department, Sri M.Gaurishankar
of the opinion that in view of the judgments of this Court in Moti Laminates
Pvt. Ltd. & Others versus Collector of Central Excise, Ahmedabad [1995 (3)
SCC 23] which has been re- affirmed in Union of India & Another versus
Delhi Cloth & General Mills co. Ltd. & Another [1997 (5) SCC 767], the
reasoning of the majority Members that specification in the tariff is proof of
marketability, cannot be accepted. The evidence as to marketability that the
Revenue may produce is, in our opinion, to be separately gone into in
conjunction with other evidence that is produced by the assessee. In the
present case, the two members who have gone merely by the specification, have
not gone into the evidence produced by the parties on the question of
marketability. Hence on that question, the matter has to be remitted to the
Tribunal. On the other question relating to whether the intermediate product
falls within the tariff item 15A(1)(ii) or not, one of the members has directed
a remand while the reasoning given by the other two members is rather cryptic
and not elaborate. We, therefore, think that even on this point as to whether
the beads fall within tariff entry 15A(1)(ii), the matters have to be remitted
to the Tribunal.
accordingly, set aside the judgments of the Tribunal in both cases and remit
the matters to the Tribunal both on the question as to marketability of the
intermediate products and also on the question whether they fall within tariff
item 15A(1)(ii). So far as the question of limitation in Civil Appeal No. 2110
of 1988 is concerned, the unanimous finding of the CEGAT shall stand confirmed.
The appeals are allowed as stated above. There will be no order as to costs.