1990 (11) TMI 417 - AT - Central Excise

Tribunal rules material not sodium rosinate, assessees win appeal

The Tribunal ruled in favor of the appellants, finding that the material in question was not sodium rosinate or a derivative of rosin. It was deemed ... - Issues Involved:1. Whether the material in question, which is being manufactured at the intermediate stage, is 'sodium rosinate'.2. If not, whether it is a derivative of rosin.3. Whether it is marketable.4. Whether there was justification for invoking a longer period of limitation.Detailed Analysis:1. Whether the material in question is 'sodium rosinate':The appellants contended that they were not manufacturing 'sodium rosinate' but rather an aqueous solution used for sizing paper. The process involves mixing soda ash and rosin, heating, and then using the resultant emulsion for paper sizing. The adjudicating authorities alleged that the appellants were manufacturing sodium rosinate, but the evidence provided, including chemical test reports, indicated that the product was an aqueous solution or emulsion rather than pure sodium rosinate. The dictionary definition of sodium rosinate (sodium abietate) describes it as a white powder soluble in water, derived by leaching rosin with sodium hydroxide solution. The test reports and the adjudicating authorities' findings did not conclusively prove the manufacture of sodium rosinate as defined.2. Whether it is a derivative of rosin:The adjudicating authorities suggested that the material might be a derivative of rosin. However, technical literature and definitions provided by the appellants indicated that a derivative should be a solid, easily prepared, and purified substance. The material in question did not meet these criteria, as it was an aqueous solution or emulsion used in a continuous process. The adjudicating authorities did not provide sufficient evidence to classify the material as a derivative of rosin.3. Whether it is marketable:The appellants argued that the material was not marketable as it was produced in a continuous process and had a short shelf life. The adjudicating authorities did not provide evidence of marketability. The Supreme Court rulings in Bhor Industries Ltd. v. CCE and CCE, Baroda v. A.S. Enterprise established that for a product to be excisable, it must be marketable. The department failed to prove that the material was marketable, and thus, it could not be considered excisable.4. Whether there was justification for invoking a longer period of limitation:The longer period of limitation was invoked on the grounds of alleged suppression of facts by the appellants. However, the appellants had been availing of benefits under Notification No. 201/79, which required them to disclose the use of rosin in their manufacturing process. The adjudicating authorities acknowledged that the demand arose due to changes in the Central Excise Tariff and not due to suppression of facts. Therefore, the invocation of the longer period of limitation was not justified.Conclusion:The Tribunal concluded that the material in question was not sodium rosinate, nor was it a derivative of rosin. It was not marketable, and the invocation of the longer period of limitation was unjustified. The benefit of Notification No. 225/86 was admissible. Consequently, the appeals filed by the assessees were allowed, and the appeals filed by the Collector of Central Excise were dismissed.