Tribunal remands case for fresh review, instructs Collector to consider evidence, parties to provide additional evidence before hearing.

The Tribunal set aside the impugned order and remanded the matter to the original authority for de novo adjudication. The Collector was instructed to consider the evidence provided by the appellants and pass a detailed order as per law. The department was also directed to provide any additional evidence to the appellants for countering before the personal hearing.

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Issues Involved:
1. Classification and duty liability of intermediate products.
2. Marketability of the intermediate products.
3. Invocation of the extended period under Section 11A of the Central Excises and Salt Act, 1944.
4. Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.
5. Consideration of evidence provided by the appellants.

Detailed Analysis:

1. Classification and Duty Liability of Intermediate Products:
The appellants were issued a show cause notice invoking the proviso to Section 11A(1) of the Central Excises and Salt Act, 1944, demanding Rs. 2,89,02,653 for intermediate products (CMCB, DFDTP, and Sodium Salt of DEDTP) used in manufacturing insecticides/pesticides. The department classified these intermediates under Chapter sub-heading No. 2942.00, chargeable to duty at 15% ad valorem (BED) and SED 5% of BED from 1-3-1988 onwards. The Collector confirmed the duty and imposed a penalty of Rs. 25,000/- under Rule 173Q of the Central Excise Rules, 1944.

2. Marketability of the Intermediate Products:
The appellants contended that the intermediate products were not of standard grade, not chemically pure, had a short shelf life, and were not stored or preserved except during breakdowns. They argued that these intermediates were not known in the market and had no buyers, thus not qualifying as "goods" for excise purposes. The Collector, however, held that the products were identifiable organic compounds and required to be classified under Chapter Heading 29.42, irrespective of their purity or shelf life. He rejected the appellants' evidence, stating it only established a limited shelf life, not marketability.

3. Invocation of the Extended Period under Section 11A:
The department alleged that the appellants did not notify the manufacture of intermediate products, did not discharge duty liability before captive consumption, and contravened various provisions of the Central Excise Act. The appellants argued there was no suppression of facts, as they had applied for an L6 license and furnished the complete manufacturing process and flow chart. They claimed departmental officers had visited their factory and never informed them about the product's exigibility, thus invoking the extended period under Section 11A was unjustified. The Collector rejected this plea and confirmed the duty invoking the larger period.

4. Imposition of Penalty under Rule 173Q:
The department imposed a penalty of Rs. 25,000/- under Rule 173Q of the Central Excise Rules, 1944, for the appellants' failure to notify the manufacture of intermediate products and discharge duty liability. The appellants argued they were under a bona fide belief that the intermediates were not excisable and had no motivation to evade duty. The Collector upheld the penalty, asserting the appellants' actions contravened excise provisions.

5. Consideration of Evidence Provided by the Appellants:
The appellants produced evidence, including letters from the Indian Institute of Chemical Technology, Pesticides Association of India, and P.R.K. Agencies, stating the intermediate products were not known in the market, had limited shelf life, and were not traded or sold. The Collector dismissed this evidence, stating it did not prove non-marketability. The Tribunal noted the Collector had not applied his mind to the evidence and the department had not shown the goods were marketable or had a shelf life. The Tribunal found the impugned order suffered from non-application of mind and remanded the matter for de novo adjudication, instructing the Collector to consider the evidence and pass a detailed order as per law.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter to the original authority for de novo adjudication, instructing the Collector to consider the evidence provided by the appellants and pass a detailed order as per law. The department was also instructed to provide any additional evidence to the appellants for countering before the personal hearing.

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