Marketability and retrospective notifications: actual sales proved goods were marketable, and later clarification did not operate retrospectively.

Repeated and continuing sales of carded/combed cotton sliver to other mills established that the product was marketable and saleable goods, so machinery used to produce it fell within the Rule 57Q exclusion and Modvat credit on the carding machine and speed frame was unavailable up to 20-10-1994. Notification No. 60/94 (N.T.) dated 21-10-1994 was held not to be retrospective, because its text contained no express declaratory or clarificatory language indicating such effect. The Revenue's position prevailed, the appellate orders were set aside, and denial of Modvat credit was restored.

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Issues: (i) Whether carded/combed cotton sliver was marketable goods so as to attract the exclusion under Rule 57Q of the Central Excise Rules, 1944 and render the machinery used for producing it ineligible for Modvat credit up to 20-10-1994; (ii) Whether Notification No. 60/94 (N.T.) dated 21-10-1994 operated retrospectively as a clarificatory notification.

Issue (i): Whether carded/combed cotton sliver was marketable goods so as to attract the exclusion under Rule 57Q of the Central Excise Rules, 1944 and render the machinery used for producing it ineligible for Modvat credit up to 20-10-1994.

Analysis: The evidence of repeated and continuing sales to other mills showed that the product was not a mere stray by-product but a commercially traded item. Actual purchase by other units for use in spinning operations established both marketability and saleability. On that footing, the product answered the description of goods, and the machinery used for its production fell within the exclusion from credit under Rule 57Q. The contention that expert opinion or tariff description displaced market evidence was rejected.

Conclusion: The product was held to be marketable goods, and Modvat credit on the carding machine and speed frame was not available up to 20-10-1994.

Issue (ii): Whether Notification No. 60/94 (N.T.) dated 21-10-1994 operated retrospectively as a clarificatory notification.

Analysis: The notification was read on its plain language, and nothing in its text indicated that it was declaratory, clarificatory, or intended to operate retrospectively. In the absence of express retrospective language, no such effect could be inferred.

Conclusion: The notification was held not to have retrospective effect.

Final Conclusion: The Revenue succeeded on the substantive issues, the impugned appellate orders were set aside, and the order denying Modvat credit up to 20-10-1994 stood restored.

Ratio Decidendi: Marketability may be established by reliable evidence of actual and repeated sale, and a notification does not operate retrospectively unless its text clearly provides for such effect.

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