Tribunal rules Gold Cyanide Solution not dutiable, criticizes revenue department, appeal allowed after 27 years

The Tribunal ruled that the "Gold Potassium Cyanide Solution" used as an intermediate product for manufacturing Gold Eyed Handle Sewing Needle was not marketable and therefore not subject to duty. The Tribunal criticized the revenue department for not establishing the marketability of the product and emphasized the importance of both the manufacturing process and marketability for dutiability. The appeal was allowed, overturning the duty demand and declaring the impugned order unsustainable after 27 years of legal proceedings.

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Issues Involved:
Dutiability of "Gold Potassium Cyanide Solution" as an intermediate product for manufacturing Gold Eyed Handle Sewing Needle.

Analysis:
The issue in dispute pertains to the dutiability of the "Gold Potassium Cyanide Solution" used as an intermediate product by the appellant for manufacturing Gold Eyed Handle Sewing Needle. The primary question is whether this intermediate product is subject to duty or not.

In the initial round of litigation, the Tribunal had remanded the matter with specific directions related to the classification of the product, establishment of marketability, and the period for confirming duty liability. Subsequent proceedings led to a demand of &8377; 18,47,048 for a limited period, along with a penalty. The Commissioner (Appeals) upheld the duty demand while vacating the penalty, prompting the appellant to appeal again.

During the hearing, the consultant for the appellant highlighted the lack of discussion on the marketability of the Gold Potassium Cyanide Solution in the impugned order. The consultant argued that the product, being highly poisonous and unstable, cannot be marketed in its current form. On the other hand, the AR for the respondent contended that since the appellant manufactures the solution in the factory, it qualifies as a marketable product.

Upon reviewing the arguments and evidence presented, the Tribunal noted that the literature provided by the AR only pertained to the solid crystalline form of Gold Potassium Cyanide, not the solution manufactured by the appellant. The Tribunal emphasized that the marketability of the appellant's product had not been established by the revenue department. Referring to a landmark judgment, the Tribunal reiterated the twin tests of manufacturing process and marketability required for a product to be considered dutiable.

The Tribunal expressed disappointment over the failure of lower authorities to comply with specific remand instructions in previous rounds of litigation, resulting in prolonged legal proceedings spanning over 27 years. Ultimately, the Tribunal ruled that the Gold Potassium Cyanide Solution in question was not marketable and therefore could not be subjected to duty as proposed by the department. The impugned order was deemed unsustainable, and the appeal was allowed with any consequential benefits as per the law.

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