1995 (4) TMI 161 - AT - Central Excise

Pre-polymer syrup of MMA deemed non-excisable due to instability and lack of marketability

COLLECTOR OF C. EX., VADODARA Versus GUJARAT STATE FERTILIZERS CO. LTD.

COLLECTOR OF C. EX., VADODARA Versus GUJARAT STATE FERTILIZERS CO. LTD. - 1995 (78) E.L.T. 447 (Tribunal) Issues Involved:1. Excisability and classification of Pre-polymer syrup of Methyl Methacrylate Monomer (MMA).2. Marketability of the Pre-polymer syrup.3. Burden of proof for marketability.4. Previous rulings and their relevance to the current case.Detailed Analysis:1. Excisability and Classification of Pre-polymer Syrup of Methyl Methacrylate Monomer (MMA):The primary issue in this case is whether the Pre-polymer syrup of MMA, an intermediate product in the manufacture of acrylic sheets, is excisable and how it should be classified under the Central Excise Tariff. The Assistant Collector had initially classified the product under Tariff sub-heading 3906.10, deeming it excisable. This classification was challenged, leading to a remand by the CEGAT for fresh determination, emphasizing the need to establish marketability as a criterion for excisability.2. Marketability of the Pre-polymer Syrup:The marketability of the Pre-polymer syrup was a critical factor. The Tribunal had previously noted that the Department had not provided evidence to counter the claim that the product, due to its unstable nature and short shelf life, was not marketable. Expert opinions from the Department of Chemistry, Sardar Patel University, and the Assistant Chemical Examiner supported the claim that the product was highly unstable and not marketable. Despite this, the Assistant Collector argued that the product could be marketable if stored under proper conditions, which was contested by the respondents who provided 31 certificates from customers stating the product was not marketable.3. Burden of Proof for Marketability:The Collector (Appeals) highlighted that the burden of proving marketability lies with the Department when the excisability of a product is contested. This principle was supported by the Supreme Court's observation in the case of Collector of Central Excise v. Ambalal Sarabhai Enterprises, which stated that the Department must provide evidence of marketability if the assessee resists duty on that ground. The Assistant Collector's failure to address the evidence provided by the respondents on non-marketability was a significant oversight.4. Previous Rulings and Their Relevance to the Current Case:The previous order No. 27/1982 by the Assistant Collector, which held the product non-excisable due to its unstable nature and lack of marketability, was accepted by the Department and not appealed. This order was referenced to support the respondents' claim. Additionally, the Supreme Court's decision in Moti Laminates Pvt. Ltd. v. Collector of Central Excise emphasized that even if a product is specified in the tariff, it must still meet the marketability criterion to be excisable. This ruling further supported the respondents' position that the pre-polymer syrup, despite being listed in the tariff, was not marketable and thus not excisable.Conclusion:After careful consideration of the evidence and expert opinions, the Tribunal concluded that the pre-polymer syrup of MMA is not a fully polymerized product, is highly unstable, and not marketable. The Department failed to rebut the evidence of non-marketability provided by the respondents. The appeal by the Collector of Central Excise, Vadodara, was rejected, and the order of the Collector (Appeals) was upheld, confirming that the pre-polymer syrup is not excisable.