Tribunal Rules Intermediate Goods Non-Excisable Due to Failure of Manufacture and Marketability Tests.

The Tribunal allowed the appeal, concluding that the intermediate goods produced by the Appellant's Coimbatore unit were not subject to excise duty as they failed the twin test criteria of manufacture and marketability. The show cause notice did not establish the goods' marketability, rendering the adjudication unsustainable. The Tribunal's decision aligned with the Apex Court's precedents, emphasizing that mere manufacture does not automatically make goods excisable without meeting both criteria. Consequently, the Appellant was relieved of any excise duty liability for the intermediate goods transferred to Pondicherry for further processing.

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Issues involved: Interpretation of excisability of goods u/s Central Excise Tariff Act prior to 10-5-2008.

Summary:
1. The Appellant argued that mere manufacture does not automatically make goods excisable, emphasizing the twin test criteria as established by the Apex Court in Board of Trustees v. CCE, A.P. The first test requires the goods to be manufactured and listed in the Central Excise Tariff Act, while the second test involves marketability. The goods produced by the Coimbatore unit were deemed intermediate and not marketable as a tradable commodity, hence not subject to duty when transferred to Pondicherry for further processing into finished goods.

2. The Revenue contended that duty is applicable when intermediate goods are manufactured.

3. The Tribunal found it illogical for non-excisable goods to be dutiable without meeting the twin tests, as per the ruling in Board of Trustees case. The show cause notice failed to prove the marketability and tradability of the goods, relieving the Appellant of liability.

4. The adjudication lacking legal basis was deemed unsustainable, leading to the allowance of the appeal.

5. The Tribunal also considered the precedent set by the Apex Court in Cipla Ltd. v. CCE, Bangalore, which highlighted that mere manufacture does not automatically render goods excisable without fulfilling the twin test criteria.

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