Suppression and marketability findings sustained excise demand on captively consumed aluminium paint

Suppression of manufacture and non-disclosure of captive clearance justified invocation of the extended period of limitation, so the demand was held to be within time. The aluminium paint manufactured and captively consumed by the assessee was treated as excisable because the plea of short shelf life and lack of marketability was not proved by evidence or chemical analysis; the claimed shelf life was considered sufficient for use on buses, and absence of marketability was not established. On these findings, the Tribunal upheld the demand and penalty and denied relief to the assessee.

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Issues: (i) whether the demand was barred by limitation on the facts alleged in the show cause notice; (ii) whether the aluminium paint manufactured and captively consumed by the assessee was excisable goods, particularly in view of the plea of short shelf life and alleged lack of marketability.

Issue (i): whether the demand was barred by limitation on the facts alleged in the show cause notice.

Analysis: The notice specifically alleged non-disclosure of production and captive clearance of aluminium paint with wilful intention to evade duty. On the material before it, the Tribunal applied the principle that suppression of manufacture or non-declaration of an item in the classification list enables invocation of the extended period.

Conclusion: The plea of limitation was rejected and the demand was held to be within time.

Issue (ii): whether the aluminium paint manufactured and captively consumed by the assessee was excisable goods, particularly in view of the plea of short shelf life and alleged lack of marketability.

Analysis: The manufacturing process was found to be akin to paint manufacture by a regular paint manufacturer. The plea that the product had a short shelf life and was therefore not marketable was not substantiated by evidence or chemical analysis. The finding recorded was that the claimed shelf life was sufficient for use on buses and that the assessee had not established absence of marketability.

Conclusion: The aluminium paint was held to be dutiable and the assessee was denied relief on this ground.

Final Conclusion: The Tribunal upheld the demand and penalty, and the appeal failed in entirety.

Ratio Decidendi: Suppression of the manufacture or non-disclosure of a captively consumed product justifies the extended period of limitation, and a product is excisable if its marketability is not disproved by the assessee.

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