2010 (11) TMI 36 - SC - Central Excise

Supreme Court Decision on Excisability of Vitamin A Products under Central Excise Act

NICHOLAS PIRAMAL INDIA LTD Versus CCE, Mumbai

The Supreme Court held that 'Vitamin A Acetate Crude' and 'Vitamin A Palmitate' are excisable under the Central Excise Act, 1944, emphasizing that ... Manufacture - Excisable goods - Marketability - Held that: the question of marketability, being a question of fact, has to be determined in the facts of each case and cannot be strait-jacketed into pigeon holes. The orders passed by the Commissioner as also the Tribunal clearly demonstrate that the product in question is commercially known and is capable of being marketed. The facts that the appellants have chosen not to sell the product in question does not mean that the same is not capable of being marketed. Short shelf-life cannot be equated with no shelf-life and would not ipso facto mean that it cannot be marketed. A shelf-life of 2 to 3 days is sufficiently long enough for a product to be commercially marketed. Shelf-life of a product would not be a relevant factor to test the marketability of a product unless it is shown that the product has absolutely no shelf- life or the shelf-life of the product is such that it is not capable of being brought or sold during that shelf-life. Issues:Determining excisability of 'Vitamin A Acetate Crude' and 'Vitamin A Palmitate' under Central Excise Act, 1944; Marketability of the product in question; Limitation period for demands raised by the Revenue.Excisability of 'Vitamin A Acetate Crude' and 'Vitamin A Palmitate':The Civil Appeal questioned whether 'Vitamin A Acetate Crude' and 'Vitamin A Palmitate' are excisable to duty under the Central Excise Act, 1944. The appellant argued that the demand for duty on the intermediary product was unjustified as it was incapable of being marketed due to its short shelf-life and instability. The appellant contended that the burden of proving marketability rested on the respondent, emphasizing the need for evidence supporting marketability. Legal precedents were cited to support the appellant's position. However, the respondent countered, asserting that the product in question was marketable based on findings by the Tribunal and Commissioner. The Supreme Court highlighted that excise duty is levied upon manufactured goods that are known to the market and capable of being sold, emphasizing that actual sale is not a prerequisite. The Court referenced various judgments to establish the principle that intermediate products, even if not sold, could be subject to excise duty if they meet the criteria of manufacture and marketability. The Court upheld the findings that the product in question was commercially known and capable of being marketed, even though the appellant did not sell it, as it was used in manufacturing a marketable product.Marketability of the Product:The Court addressed the argument that the product's short shelf-life rendered it non-marketable. However, evidence presented indicated a shelf-life of 2 to 3 days, which was deemed sufficient for commercial marketing. The Court clarified that a short shelf-life does not equate to non-marketability unless the product cannot be sold within that period. Legal precedent was cited to support this position. The Court emphasized that marketability is a factual determination that should not be disturbed unless found to be perverse or illegal. The Court rejected the argument that the product was not marketable due to its shelf-life, affirming that the product met the criteria for marketability.Limitation Period for Demands:Regarding the limitation period for demands raised by the Revenue, the Tribunal found that certain show cause notices were within limitation, while others were barred by limitation. The appellant argued that all notices were time-barred, but the Tribunal's decision was upheld. The Court noted that the appellant failed to disclose the manufacturing of the product and did not pay duty, justifying the invocation of the extended limitation period under the Central Excises & Salt Act, 1944. The Court cited a Division Bench decision to support its conclusion on the limitation issue. Ultimately, the Court found no reason to interfere with the findings on merit and limitation, dismissing the appeal and leaving the parties to bear their own costs.