Marketability, limitation, and retrospective credit denial governed excise relief for intermediate copolymer beads

Intermediate copolymer beads were treated as marketable and therefore excisable because the Revenue showed commercial availability of similar goods; captive consumption and crude form did not displace that evidence. The demand was held time-barred because the record showed filed price declarations, audit correspondence, and part-payment of differential duty, but no deliberate suppression or wilful misstatement to justify the extended limitation period. Cancellation of the Rule 57E certificate was unsustainable because the restrictive amendment to Rule 57E(3) took effect only from 01.03.1997 and could not be applied retrospectively to earlier duty-paid clearances, so duty, interest, and penalty could not survive.

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Issues: (i) Whether the intermediate copolymer beads cleared between the appellant's units were marketable and therefore excisable; (ii) whether the demand was barred by limitation for want of suppression or wilful misstatement; and (iii) whether the cancellation of the Rule 57E certificate was sustainable.

Issue (i): Whether the intermediate copolymer beads cleared between the appellant's units were marketable and therefore excisable.

Analysis: Marketability of an intermediate product must be established by evidence showing that the goods are capable of being bought and sold in the market in the condition in which they emerge. The burden lies on the Revenue. Here, the Revenue produced bills of entry showing import of similar copolymer beads by another concern, which was treated as sufficient to show that similar goods were commercially known and capable of marketability. The contention that the goods were in crude form and captively consumed did not displace that evidence.

Conclusion: The copolymer beads were held to be marketable and, therefore, excisable.

Issue (ii): Whether the demand was barred by limitation for want of suppression or wilful misstatement.

Analysis: The appellant had filed price declarations, the department had initiated correspondence and revised valuation during audit, and differential duty had already been paid for part of the period. The record did not support a finding of deliberate suppression with intent to evade duty. In the circumstances, the extended period was not invocable.

Conclusion: The demand was held to be time-barred and the invocation of the extended period was rejected.

Issue (iii): Whether the cancellation of the Rule 57E certificate was sustainable.

Analysis: The certificate related to duty paid prior to March 1997, while the restrictive amendment to Rule 57E(3) came into force only from 01.03.1997. The later restriction could not be applied retrospectively to deny credit linked to earlier clearances. The certificate had, therefore, been validly issued and could not be cancelled on that basis.

Conclusion: The cancellation of the Rule 57E certificate was held to be unsustainable.

Final Conclusion: The duty demand, interest, and penalty could not survive, and the appellant was entitled to relief.

Ratio Decidendi: In an excise dispute involving an intermediate product, marketability must be proved by the Revenue with evidence; where the extended period is unsupported by suppression and the relevant credit-denial amendment is not retrospective, the demand and ancillary adverse orders cannot stand.

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