TaxTMI 
TaxTMI 
1998 (7) TMI 630
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....ntral Excise Tariff Act, 1985. The lamps are fully exempt under Notification No. 63/83 as amended. During the course of manufacture of lamps and bulbs, the Department found that a product called 'Stem' emerges which is produced in the stem making machine. Proceedings were initiated against the appellants by a show cause notice issued on 2-9-93 on the ground that the stems produced by the appellant are identifiable parts of bulb and are capable of storage. It was also alleged that the stems, by virtue of Section Note 2(b) of Section XVI of the Central Excise Act, 1985, are classifiable as parts of GLS lamps and bulbs under sub-heading 8539.00 CETA. The show cause notice proposed to demand the duty of Rs. 75,98,428/- for the period August, 19....
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....r process the whole assembly is annealed, stem is made. The entire process, the ld. Counsel submitted, is one composite and integrated process and at no stage is it possible to handle any material including the stems; if any material is so handled the same will have to be rejected and discarded and cannot be used for further process for conversion into a bulb. The ld. Counsel urged that the stem is not marketable and it is not known in the market also. The ld. Counsel referred to the reasoning in the Commissioner's order that because the appellants are using the goods captively, the marketability criterion is satisfied and also that because the goods as parts of bulbs are listed in the CETA, they are excisable goods. The ld. Counsel in this....
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....tion process and the stems as part of the bulb are visible to the naked eye. Reliance was placed by the ld. Counsel in this regard on the Supreme Court judgment in the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay - 1995 (75) E.L.T. 721 (S.C.) and Tamil Nadu Housing Board v. Collector of Central Excise Madras - 1994 (74) E.L.T. 9 (S.C.) that intent to evade payment of duty must be proved for invoking the longer period under Section 11A of the Central Excise Act, 1944. It was further contended by the ld. Counsel that even assuming the stems are liable to duty the appellants will be entitled to Modvat credit on the inputs used in its manufacture irrespective of the facts that the procedural requirement of Modvat credit ha....
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....here the Supreme Court has held that it is for the assessee to prove that even though the goods in which he was carrying on business were excisable goods being mentioned in the Tariff but they could not be subjected to duty as they were not goods either because they were not produced or manufactured by it, or if they had been produced or manufactured, they were not marketed or capable of being marketed. In the present case the Affidavit by the two dealers according to the ld. JDR will not be conclusive of the fact that the stems are not known in the market because they are dealing in electric bulbs and the stems are consumed captively by manufacturers of such bulbs, which, as has been observed in the impugned order, would itself indicate th....
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....ression 'produced or manufactured' has further been explained by this Court to mean that the goods so produced must satisfy the test of marketability. The Supreme Court has held in the decisions cited before us by the ld. Counsel that marketability is an essential ingredient for dutiability. Simply because certain article falls within the Schedule it would not be dutiable under Excise law if the said article is not goods known to the market as held in Bhor Industries (supra) by the Supreme Court. The appellants in this case have produced evidence of their Senior Manager Technical who is conversant with the manufacturing operations of GLS Bulbs. He has said in his Affidavit that the stems are not stored but are taken and loaded mechanically ....
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....der Chapter 85 of the CETA. The Department's case was that in the manufacturing of bulbs stems come into existence and since they are of identifiable form and shape having distinct name, character and use, should be subjected to excise duty. There also the petitioner's condition was that the process of manufacturing bulbs is a continuous process done by automatic machines and that the stem coming into existence is not capable of being marketed. Paras 4 & 5 of the Delhi High Court Judgment read as follows : 'Mr. Dholakia, learned counsel for the petitioner submitted that the petitioner-company is a composite unit and the manufacturing of electric bulbs and fluorescent [tubes] is done by automatic machines in a continuous process. He furth....