1987 (3) TMI 211 - AT - Central Excise

Tribunal rules starch slurry not subject to excise duty, emphasizes modification power.

The Tribunal upheld the Assistant Collector's order to include starch slurry in the classification lists under a specific tariff item, emphasizing the ... Classification List Issues:1. Validity of Assistant Collector's order including starch slurry in classification lists.2. Whether starch slurry qualifies as goods for the purpose of excise duty levy.Issue 1:The appellants, a manufacturing company, initially included starch slurry in their classification list but later omitted it, stating it was a mistake as they neither sold nor marketed it. The Assistant Collector issued an order including starch slurry in the classification lists under a specific tariff item. The appellants argued that the Assistant Collector exceeded his power by including a new item in the list. However, the Tribunal rejected this argument, stating that modification of the list could include directing the inclusion of an item wrongly omitted by the assessee. The Tribunal upheld the Assistant Collector's order, emphasizing the power of modification under Rule 173B of the Central Excise Rules.Issue 2:The appellants contended that starch slurry should not be considered goods for excise duty levy as it was highly fermentable, not marketable, and not traded by them or anyone else. The Tribunal referred to a Supreme Court decision stating that for a product to attract excise duty, it must be marketable and have a market. The Tribunal noted that the burden of proof lies with the Department to establish that starch slurry is marketable. As the Department failed to provide evidence that starch slurry was marketed, the Tribunal accepted the appellants' contention. Additionally, the Tribunal cited another Supreme Court case to support its decision, emphasizing that duty could only be demanded on the final product, not on intermediate products in the manufacturing process. Consequently, the Tribunal allowed both appeals, setting aside the orders of the lower authorities and ruling in favor of the appellants.