TaxTMI 
TaxTMI 
2022 (5) TMI 1393
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....003 12,63,09,812/- 7/02 to 12/02 Tata Electric 4 V/Adj/Ch-1/R- 1/Cr87/2003/Com mr 02.01.2004 2,08,07,41,217/- 12/02 to 3/03 Ahmedaba d Electric 5 V/Adj/Ch-1/R- 1/Cr180/2003/Com mr 27.02.2004 2,62,13,89,938/- 01/03 to 06/03 Tata Electric 6 V/Adj/Ch-1/R- 1/Cr94/2004/Com mr 27.02.2004 3,89,62,21,763/- 04/03 to 12/03 Ahmedaba d Electric 7 V/Adj/Ch-1/R- 1/C1138/2004/Co mmr 20.05.2004 3,84,92,08,384/- 07/03 to 02/04 Tata Electric 8 V/Adj./Ch-1/R- 1/CR14/BPCL/Com mr./04 05.04.2005 22,36,63,705/- 3/04 to 12/04 Tata Electric 9 V/Adj/ch-1/R- 1/Cr3/2005/Commr 03.02.2005 41,58,120/- 1/04 to 9/04 Ahmedaba d Electric 10 V/Adj/Ch-1/R-1/Cr 47/Commr/M- 11/2005 22.09.2005 21,12,41,365/- 10/04 to 5/05 Ahmedaba d Electric & Tata Electric Total duty demanded 24,14,61,80,385/- 2.1 Respondent, a Public sector Undertaking, has a refinery for manufacture of petroleum products and organic chemicals falling under Chapter 27 and 29 of the First Schedule to the Central Excise Act, 1985 (in short "the tariff").....
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....use notice have been adjudicated by the Commissioner by the impugned order dropping the entire proceedings. 2.8 Aggrieved by the order of Commissioner, revenue has filed this appeal. 3.1 Revenue has filed this appeal on the following grounds: • The adjudicating authority erred in applying the principle of marketability since there was no mention of the same in the show cause notice. Further, the fact that the respondents were captively consuming LR & RG in the manufacture of their final product itself shows that the impugned products are saleable and hence, marketable. Actual / physical sale is not relevant to determine marketability. • The adjudicating authority did not make any conclusive and real attempt to ascertain salability and the market enquiries were incongruous. The adjudicating authority made enquiries with Reliance Refinery, Kochi Refinery and M/s MRPL about the status of Refinery Gases and Long Residues: • Reliance Refinery (Exhibit 'B') vide their letter informed that they do not manufacture these products at all and hence when the said refinery does not manufacture these products, it cannot be concluded th....
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....wer/ utility.jsp. • http://www.energyinst.org.uk/education/refineries/st anlow. htm • http://cheresources.com/refinery8.shtml, • http://www.msc.com.my/today/default.asp?sec=B&i d=68& link=fulltext,. • http://www.energy.ca.gov/oil/refinery output/definitions.ht ml, • http://www.intota.com/viewbio.asp?bioID=63760&p erID= 108062&strQuery=refinery-gas, • These evidences clearly establish that these goods are marketable. Once the two impugned goods pass the multiple tests of "marketability", "saleability", "of them being capable of being sold", the test of dutiability also succeeds, as has been held by various courts and authorities in catena of decisions as follows: • Delhi Cloth Mills [ 1977 (1) ELT (J177) (SC)] • Ilac Ltd. [1997 (94) ELT A61 (S.C.)] • Ambalal Sarabhai Enterprises [ 1989 (43) ELT 214 (S.C.)] • TISCO Ltd. [2004 (165) ELT 386 (S.C.)] • The adjudicating authority also erred in as much as prior to 1st July 2001, no duty was leviable on the intermediaries so long as they were not cleared outside the refinery in terms of Rule 143A of....
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....duty. • the adjudicating authority basically erred in treating the impugned goods i.e. Long Residue and Refinery Gases, as "inputs", when the two impugned goods were actually final products which were manufactured during the refinery process. The adjudicating authority itself has held the two impugned goods to be excisable and classified Long Residue in Ch.S.H.No.2713.30 and Refinery Gases in Ch.S.H.No.2711.19 respectively. The correct terminology to treat the two impugned goods would be "intermediate goods" (since they were captively consumed for further manufacture of final exempted product "LSHS") and not "inputs" as interpreted by the adjudicating authority. Therefore, once the two impugned goods were "intermediate goods", they also do not qualify as "inputs" and therefore are not eligible for the condition specified in Notfn. no. 67/95. • the reference to Rule 6(3)(b) of the CENVAT Credit Rules, 2001/2002/2004 in Para no. 29 of the order and its applicability in the instant matter is erroneous and incorrect. When the two impugned goods were definitely not "inputs" and were held as excisable final goods by the adjudicating authority itself, then the re....
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....cture within the meaning of Section 2 (f) of the Central Excise Act and that the assessee has not disputed the nature of the impugned goods being manufactured. • Commissioner finding that in absence of known sale or purchase of the impugned goods leads to the inevitable conclusion that the impugned goods are not marketable and hence the impugned goods are not liable to excise duty. • when the impugned goods are meant entirely for captive consumption, the question of their actual sale or purchase is not relevant and the Department is not required to prove their marketability. • Respondent had been filing classification Declaration under rule 173 B of the Central Excise Rules, 1944. In that the assessee was showing 'Refinery Gas', one of the impugned goods classifiable under sub-heading 2711-19 for captive consumption under claim for exemption under Notification No. 67/95-C.E. • Two of the classification Declarations filed under Rule 173B-one dtd. 4/6/1998 (Page 5 to 13 of PB-III) and another dtd. 19/3/2001(Page 47 to 53 of Paper Book Vol. II) clearly show that respondents themselves considered the products to be excis....
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.... 67/95 C.E. dtd. 16/3/95. On a careful examination of the notification, it would be quite clear that the intermediate goods manufactured and used within the factory of production for manufacture of dutiable final products will be entitled to the benefit of this notification. However, as per proviso to this notification, this benefit will not be available to intermediate goods used in the manufacture of final products which are wholly exempt or are chargeable to nil rate of duty. As the intermediate goods, viz. Long residue and refinery gases have been manufactured and used in the manufacture of LSHS cleared by the assessee at nil rate of duty under various notifications from time to time. Therefore the benefit of the notification No.67/95-C.E. in respect of the long residues and refinery gases as per the proviso to the notification is not admissible. • Respondents contend that the proviso to the notification is not applicable to their case. Its case is covered by the exception clause (vi) to the notification inasmuch as it has discharged the obligation prescribed in Rule 6 of the Cenvat Credit Rules, 2001. On a careful reading of this exception clause (vi), it would be....
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....ading of this decision, it is seen that the assessee manufactured, amongst others, two petroleum products, namely, Bombay High Gas Oil (BHGO) and Naphtha which emerged in the process of crude oil distillation. These two products were used as fuel in the captive power plant for generation of electricity. The electricity so generated in the captive power plant was used within the factory premises for manufacture of both dutiable and exempted goods. The Department was of the view that BHGO and Naphtha consumed in the captive power plant for generation of electricity are liable to excise duty, when such goods are used in the manufacture of exempted final products. Accordingly, show cause notices were issued demanding duty of excise covering the period December, 1998 to December, 2011. Duty demands were confirmed in adjudication. In appeal before the Tribunal, the Tribunal held that prior to 1/7/2001, duty demand would not sustain as the Refinery was deemed warehouse. However, after 1/7/2001, the appellant would be liable to pay excise duty and the benefit of Notification No.67/95-C.E. would be available to BHGO and Naphtha subject to the condition that no input duty credit has been ava....
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....mal period of limitation. 4.3 Arguing for the respondent, learned counsel submits: • The Committee on Disputes in their meeting held on 10.5.2007 (page 1 of Vol. III) had declined permission to CBEC to pursue appeal before the CESTAT in the present matter. • Additional evidence on marketability cannot be placed on record without filing application under Rule 23 of CESTAT (Procedure) Rules, 1982. • Kay Iron Works Pvt. Ltd[ 2008 (232) ELT 412 (Bom.)] • City Lubricants Pvt. Ltd. [2009 (239) ELT 70 (T)] • Industrial Security Service [2007 (8) STR 178 (T)] Prakash Pipes & Industries Ltd. [1993 (68) ELT 779 (T)] • Revenue has not filed any application before this Hon'ble Tribunal for placing any additional evidence on record. In the absence of proper procedure being followed, the additional evidence in the form of website printouts submitted by the Revenue along with the appeal / synopsis (across the bar) is liable to be rejected. • Application for placing additional evidence on marketability on record, if any, is liable to be dismissed for want of sufficient cause. • Resp....
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.... of website printouts to allege marketability. This is nothing but an attempt to make mockery of entire judicial and adjudication proceedings. • Revenue is relying upon respondents' letters dated 4.8.1998 & 11.1.2003 and declarations filed under Rule 173B of the erstwhile Rules to contend that LR & RG are marketable goods. There is no estoppel in law against a party in taxation matters as held by the Apex Court in Dunlop India Ltd. & Madras Rubber Factory Ltd. Vs. UOI & Others - 1983 (13) ELT 1566 (SC). • Demand for the period prior to 1.7.2001 is not sustainable as the same has not been disputed by the Revenue in its grounds of appeal. • In any case, for the period prior to 1.7.2001, LR & RG are not liable to excise duty in view of the warehousing provisions & settled legal position. • For the period after 1.7.2001, LR & RG are not liable to excise duty in view of Notification No.67/95-CE dated 16.3.1995. Respondents have not availed CENVAT Credit in respect of the inputs used in the manufacture of LSHS cleared by them under exemption. Therefore as per the ratio of the decisions as follows, they benefit under Notification 67/....
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....tral Excise Tariff Act, 1985, i.e. the Tariff. 10 these prerequisites under Section 3, Hon'ble Supreme Court in several landmark judgements has added another, the marketability of goods. 12. Thus for any goods to be dutiable in terms of Section 3 CEA, they must be: (a) excisable goods; and (b) produced or manufactured in India. (c) marketable. Do the impugned goods satisfy these three tests? Let us examine. 13. Section 2(d) CEA defines 'excisable goods' as goods specified in the First Schedule to the Central Excise Tariff Act 1985 as being subject to duty of excise. Between the impugned goods, LR fell during the relevant period under Chapter subheading 2713.30 and RG under 2711.19 of the Tariff. This classification was clearly spelt out in the show cause notices and the noticee has not disputed it. The impugned goods are, therefore, undisputedly excisable goods within the meaning of Section 2(d) of CEA. 14. Section 2(1) of CEA defines manufacture to include inter alia any process incidental or ancillary to the completion of a manufactured product. Both the impugned goods, ....
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....rmation was sought from the following. i. Deputy Commissioner of Customs, Oil Unit, Mumbai Custom House who is in charge of all oil imports at Mumbai. ii. D.Cs Central Excise, Cochin Jamnagar and Mangalore in whose jurisdiction are located refineries of three different companies namely M/s Kochi Refineries, M/S Reliance Industries and M/S MRPL respectively None of the above officers reported imports from abroad or removals of the LR and RG from these refineries. 19. These reports from jurisdictional Assistant Commissioners of refineries and Mumbai Custom House prima facie indicated that the impugned goods were not being marketed. Although as per the observations of the apex court actual marketing of goods was not essential to judge their marketability, their saleability or suitability of sale was. Yet actual sale and purchase was a clear indicator of saleability for in Camplin Ltd. vs. Commissioner (2005 (180) ELT 308(SC) and Okay Play (India) vs. Commissioner of Central Excise (2005 (180) ELT 291(SC)}, it had been held that marketability was a question of fact and any actual sale / purchase or import/export was enough to establ....
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....ng elementary or crude about them. As asbestos products, they were fully manufactured. Nothing further was required to be done to make them fully manufactured asbestos products. The appellants' contention that the said rings were brittle and fragile articles and hence not marketable "was simply not true. We examined the sample of the rings very carefully. Asbestos fibre is a very strong material. If the ring is allowed to fall on the floor, nothing would happen to it. We found it neither brittle nor fragile. It was perfectly capable of being handled and transported for marketing". In so far as the aforementioned affidavits were concerned, the Tribunal observed that the deponents were "not the right persons to give opinion on the type of the products with which we are concerned in this case. The disputed products are industrial goods. Only industrialists engaged in the manufacture of brake linings and clutch facings would be interested in them and not a dealer who sells commonly used asbestos products in the market". The Tribunal went on to state, "Any small scale or medium scale manufacturer of brake linings and clutch facings would be interested in buying the asbestos rings and as....
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....y are usable, would determine the existence of the market for the said goods. In the case Moti Laminates Pvt. Ltd [1995 (76) ELT 241 (SC)], Hon'ble Supreme Court has observed as follows: "6. The duty of excise is leviable under Entry 84 of List I of the VIIth Schedule on goods manufactured, or produced. That is why the charge under Section 3 of the Act is on all, 'Excisable goods', 'produced or manufactured'. The expression 'excisable goods' has been defined by clause (d) of Section 2 to mean, "goods' specified in the Schedule. The scheme in the Schedule is to divide the goods in two broad categories - one, for which rates are mentioned under different entry and other the residuary. By this method all goods are excisable either under the specific or the residuary entry. The word 'goods' has not been defined in the Act. But it has to be understood in the sense it has been used in Entry 84 of the Schedule. That is why Section 3 levies duty on all excisable goods mentioned in the Schedule provided they are produced and manufactured. Therefore, where the goods are specified in the Schedule they are excisable goods but whether such goods can ....
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.... Company Limited (supra), we disagree with the appellant's that zinc dross, flux skimming and zinc scallings are goods and hence excisable". 5.7 In case of Lupin Limited [2013 (293) ELT 354 (Guj)], Hon'ble Gujarat High Court held as follows: "25. The test to be applied in ascertaining whether a product would be exigible to excise duty, one of the important aspects is its marketability. What is to be ascertained is not merely that a product is manufactured, but that it is also marketable. On this point, there is clearly no dispute. Several decisions cited before us of the Apex Court bring about such a legal proposition. It is also well settled that merely because the product is mentioned in one of the entries in the Central Excise Tariff Act or finds place in the notification issued for the purpose of claiming duty drawback under the customs law, by itself would not be conclusive of the fact that such produce is either marketable or that, therefore, it is exigible to excise duty. 26. In case of Bata India Ltd. v. Commissioner of Central Excise, New Delhi (supra), the Apex Court observed as under : "18. Revenue in this case has not succeeded ....
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....ai Enterprises (P) Ltd., the finding in each case on the basis of the material before the court was that the articles in question were not marketable and were not known to the market as such. The 'marketability' is thus essentially a question of fact to be decided on the facts of each case. There can be no generalization. The fact that the goods are not in fact marketed is of no relevance." 9. It may be noticed that in the cases referred to in the passage, quoted above, the reasons for holding the articles "not marketable" are different, however, they are not exhaustive. It is difficult to lay down a precise test to determine marketability of articles. Marketability of goods has certain attributes. The essence of marketability is neither in the form nor in the shape or condition in which the manufactured articles are to be found, it is the commercial identity of the articles known to the market for being bought and sold. The fact that the product in question is generally not being bought and sold or has no demand in the market would be irrelevant. The plastic body of EMR does not satisfy the aforementioned criteria. There are some competing manufacturers of EMR. Each is ha....
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....old the Department's stand that it is marketable without any other evidence on record. 32. In the present case, having first issued show cause notice in the year 1986 and having lost up to the level of the Tribunal, the Department has issued second show cause notice. The decision of the Tribunal in the first round of litigation achieved finality. In the present case, under the fresh show cause notice impugned in this petition, the respondents seek to levy excise duty on the same product virtually on the same grounds. Only additional material, if one may so hold, is the chemical examination to suggest that the product is stable. The Department also heavily relies on the patent issue by U.S. Office to contend that the product being identical, should be held exigible to excise. Other than these two factors, we find virtually no further evidence collected by the Department to subject the petitioners to fresh round of litigation. We may deal with these two questions presently. 33. Insofar as the opinion of the chemical examiner that the product is stable, that by itself as held by the Apex Court in the case of Cadila Laboratories Pvt. Ltd. (supra), would no....