2009 (6) TMI 560 - AT - Central Excise

Tribunal Remands Cream Classification Dispute for Marketability Evaluation Under Central Excise Tariff Act

The case involved the classification of cream used in various biscuits under the Central Excise Tariff Act, 1985. The Tribunal found that the Commissioner ... Cream used in biscuts- The appellants are engaged in the manufacture of Glucose Biscuits, Elaichi Cream Biscuits and Orange Cream Biscuits. The issue involved in this case is as to whether the intermediate product viz. cream used in the Cream Biscuits would be classifiable under Heading No. 2106.90 of the Schedule to the Central Excise Tariff Act, 1985. The main contention of the appellant is that the cream is not marketable and, therefore, it is not excisable. The Commissioner confirmed the demand, cream consumed captively in the manufacture of biscuits and also imposed penalty of equal amount and a penalty was also imposed on the Director of the appellant company. In the light of the decision of Moti Laminates Pvt. Ltd. v. Collector of Central Excise reported in 1995 (76) E.L.T. 241 (S.C.), held that- we find that the Original Authority failed to examine the issue of marketability in proper manner. To meet the ends of justice, it is fit and proper that the matter should be remanded to the Commissioner of Central Excise to examine the marketability in the light of the above decisions. Both the appeals are allowed by way of remand. Issues: Classification of cream used in biscuits under Central Excise Tariff Act, 1985Issue 1: Classification of cream used in biscuitsThe case involved the classification of cream used in Glucose Biscuits, Elaichi Cream Biscuits, and Orange Cream Biscuits under Heading No. 2106.90 of the Central Excise Tariff Act, 1985. The appellant argued that the cream was not marketable and thus not excisable. The Commissioner upheld the duty demand for the period in question, along with penalties. The appellant contended that the cream had a short shelf life of 24 hours, making it unsuitable for sale in the market. The onus of proving marketability was highlighted, with the appellant stressing that the Revenue failed to establish the cream's marketability.Issue 2: Lack of proper examination of marketabilityThe Tribunal noted that the Commissioner's order did not adequately examine the issue of marketability. The Assistant Commissioner's report suggested the possibility of marketing the cream by other biscuit manufacturers, but no concrete evidence or market enquiry was presented. The Tribunal emphasized that the burden of proving marketability rested on the Revenue, citing relevant legal precedents. It was observed that the Commissioner's decision was based on the cream's classification without a thorough assessment of its marketability. The Tribunal referenced previous cases where goods, even if falling under a tariff item, were not excisable if not marketable.Judicial Precedents and Remand DecisionThe Tribunal referred to legal precedents, such as the case of Hindustan Zinc Ltd. v. CCE, emphasizing the importance of proving marketability for excisability. Additionally, the case of Moti Laminates Pvt. Ltd. v. Collector of Central Excise was cited to underscore the requirement of marketability for goods to be excisable. Ultimately, the Tribunal held that the Original Authority had not properly examined the issue of marketability. As a result, the matter was remanded to the Commissioner of Central Excise for a thorough assessment of marketability, in line with the legal principles discussed. Both appeals were allowed by way of remand, with the directive for the Commissioner to provide a fair opportunity for all parties involved before making a decision. The stay applications were disposed of, and all issues were left open for further consideration.