Markability of goods - establishment of

PJ/Case Laws/2011-12/1486

Case: ION EXCHANGE (INDIA) LTD v/s COLLECTOR OF CENTRAL EXCISE, BARODA

Citation: 2002-TIOL-848-SC-CX

Issue:- Marketability of goods cannot be decided on mere specification given in Tariff but to be proved in the light of evidence adduced by parties.

Brief Facts:- The 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. 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 members were agreed that the demand of duty could not exceed six months preceding the show cause notice. But on the first and second points there was difference of opinions. On of the members held that the disputed goods were distinct items as compared to the end product and that they were marketable goods in as much 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 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 the question. As to the classification, they felt no remand was necessary. The 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.

Appellant’s Contention:- The appellant contended that the Tariff Item No. 15A (1) (ii) was not applicable and also the first appellate authority had not gone in to the marketability of the intermediate product as the said authority did not notice the evidence produced by him.

Reasoning of Judgment:- The Supreme Court held that in view of the judgments of the court in Moti Laminates Pvt. Ltd. & Others v. Collector of Central Excise, Ahmedabad [1995 (76) E.L.T. 241 (S.C which has been re-affirmed in Union of India v. Delhi Cloth & General Mills Co. Ltd. & Another [1997 (92) E.L.T. 315 (S.C.)] 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 their opinion, to be separately gone into 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 evidences produced by the parties on the question of marketability. Hence on the 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. Matter remitted on this issue also.

Decision:- Appeal allowed.

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PJ/Case Laws/2011-12/1486

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