2008 (3) TMI 330 - SC - Central Excise

Supreme Court: Revenue failed to prove marketability of Benzyl Methyl Salicylate for excise duty.

The Supreme Court set aside the Tribunal's order, ruling that the Revenue failed to prove the marketability of Benzyl Methyl Salicylate (BMS), essential ... Whether the goods were excisable or not? Held that:- Since marketability is an essential ingredient to hold that a product is dutiable or exigible, it was for the Revenue to prove that the product was marketable or was capable of being marketed. Since the Revenue has failed to lead any evidence to show that the product in question was marketable or was capable of being marketed and that the product in question was a distinct product for being sold in the market, it has to be held that the product in question was not marketable. Accordingly, the appeal is accepted. Against revenue. Issues involved:1. Classification of Benzyl Methyl Salicylate (BMS) as excisable or non-excisable item under the Central Excise Act.2. Marketability of BMS and its liability to central excise duty.Analysis:1. The appellant, engaged in manufacturing medicines and organic chemicals, declared BMS as non-excisable in their classification lists. Revenue issued show cause notices proposing BMS as liable to duty. Assistant Collector classified BMS as excisable under specific headings.2. High Court quashed the original order, leading to further litigation. Assistant Collector, in a fresh order, held BMS not excisable based on marketability inquiries and lack of evidence. Collector reviewed the order, and the Commissioner (Appeals) found BMS marketable due to transportation to another facility.3. Tribunal's two-member Bench had a difference of opinion on marketability. Third member agreed with the marketable view, dismissing the appeal. However, no evidence was presented by Revenue to prove marketability, relying on a directory listing.4. Citing various legal precedents, the Court emphasized marketability as crucial for duty imposition. Lack of evidence on marketability led to the conclusion that BMS was not marketable. Mere manufacturing activity does not establish marketability without evidence of buying or selling.In conclusion, the Supreme Court set aside the Tribunal's order, ruling that the Revenue failed to prove the marketability of BMS, essential for excise duty imposition. The Court emphasized the need for distinct market presence for a product to be considered marketable, highlighting the absence of evidence of buying or selling in this case. Thus, the appeal was accepted, and no costs were awarded.