Excise duty demand failed where Horton Spheres were not excisable and no duty was collected on supply.

Excise duty demand on Horton Spheres supplied to Indian Oil Corporation was unsustainable because the item supplied was not excisable and no excise duty was collected from the buyer. The record further showed that the amount described as duty had been deposited at the raw material stage, not on the final product cleared to the buyer. As the factual basis for levy was not established, the demand failed and the appeals were dismissed.

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Issues: Whether the excise duty demand could be sustained in respect of Horton Spheres supplied to Indian Oil Corporation when the goods were not excisable and no excise duty was collected from the buyer.

Analysis: The item supplied did not attract excise duty. The record also showed that the amount referred to as duty had been deposited at the stage of raw material, while the final product supplied to Indian Oil Corporation carried no excise duty collection. In these circumstances, the foundation for the demand was not established.

Conclusion: The excise duty demand was unsustainable and the appeals were dismissed.

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