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Issues: (i) Whether wet cake of synthetic organic dyestuff captively consumed in the manufacture of dispersed organic pigment paste was classifiable as synthetic organic dyestuff and liable to central excise duty under Tariff Item 14D. (ii) Whether the demand raised by show cause notices issued in April 1984 for the year 1981-82 was barred by limitation under Section 11A of the Central Excises & Salt Act, 1944.
Issue (i): Whether wet cake of synthetic organic dyestuff captively consumed in the manufacture of dispersed organic pigment paste was classifiable as synthetic organic dyestuff and liable to central excise duty under Tariff Item 14D.
Analysis: The wet cake had attained the nature and character of synthetic organic dyestuff and was not merely an unfinished intermediate product. The fact that further drying, pulverising or blending would be needed for marketing did not prevent the product from being fully manufactured for excise purposes. Captive use in the manufacture of dispersed organic pigment paste did not take the product outside Tariff Item 14D, and the material was capable of marketability.
Conclusion: The wet cake was correctly chargeable to central excise duty under Tariff Item 14D.
Issue (ii): Whether the demand raised by show cause notices issued in April 1984 for the year 1981-82 was barred by limitation under Section 11A of the Central Excises & Salt Act, 1944.
Analysis: The notices were issued beyond the normal six-month period. For invoking the extended period, a positive act of suppression or conscious withholding of information was required. The Department had knowledge of the product and no sufficient material showed deliberate suppression by the respondents. The extended period was therefore not available.
Conclusion: The demand was time-barred and not sustainable.
Final Conclusion: Although the product was held to be excisable, the revenue demand could not be enforced because the notices were beyond limitation, so the appeals failed.
Ratio Decidendi: A product that has attained the character of a tariff-specified excisable commodity remains dutiable even if captively consumed and further processing is needed only for marketing, but duty cannot be recovered beyond the normal limitation period unless the Department establishes positive suppression or conscious withholding of material facts.
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