2010 (7) TMI 442 - AT - Central Excise

Manufacturer wins appeal over intermediate products classification; Tribunal criticizes lack of evidence and sustains appeals.

The Appellate Tribunal CESTAT, Kolkata ruled in favor of the manufacturer of railway construction materials in two Appeals involving the manufacture of ... Excisability - fish plates, two-way keys, bearing plates, base plates falling under Chapter Heading 7302 - excisability of any product on the department - claim of the department that the fish plates which were cut to required length in red hot condition and which were cooled should be treated as ‘Flat-rolled Products’ and that they were marketable not supported by any evidence - Commissioner was not correct in ignoring the claim of the assessee that the intermediate products in red hot condition are not marketable especially in the absence of any evidence - Commissioner has come to a conclusion that the intermediate products are flat rolled products falling under Chapter 72 without giving any finding as to which sub-heading they fall under so as to attract the Compounded Levy Scheme. In other words, there is no finding by the Commissioner that the said intermediate products fall under 7214.90 or 7216.10 as alleged in the Show Cause Notice. - Order set aside - decided in favor of assessee. Issues:Manufacture of intermediate products under Compounded Levy Scheme, denial of credit on inputs, marketability of intermediate products, classification of products under Central Excise Tariff Act.Analysis:The judgment by the Appellate Tribunal CESTAT, Kolkata dealt with two Appeals by the same Appellant involving common issues across different periods. The Appellants, manufacturers of railway construction materials, were accused of manufacturing intermediate products under specific sub-headings and attracting duty under the Compounded Levy Scheme. The original authority demanded duty and denied credit on inputs, leading to penalties. The Appellant argued that the intermediate products were not marketable and that the Commissioner's conclusions were unfounded, lacking proper classification under the Central Excise Tariff Act.The Tribunal considered both sides' submissions and the burden of proof on the department to establish excisability. It noted the absence of evidence supporting the department's claim that the intermediate products were marketable flat-rolled products. The Tribunal found fault with the Commissioner for disregarding the Appellant's claim about the marketability of the intermediate products without evidence to the contrary. It highlighted that the emergence of these products was part of the manufacturing process for final products and questioned the Commissioner's classification without specifying the relevant sub-headings for the Compounded Levy Scheme.Ultimately, the Tribunal sided with the Appellant, holding that the Commissioner's order was unsustainable. The impugned orders were set aside, and the Appeals were allowed with consequential relief as per the law. The judgment emphasized the importance of proper evidence and classification in excise matters, ensuring fair treatment for the Appellant in this case.