Custom, Excise & Service Tax Tribunal
Hindustan Pencil Pvt. Ltd vs Cce, Coimbatore on 15 April, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/EH/42253/2014 and E/331/2009
(Arising out of Order-in-Appeal No.49/2009-CE dated 20.3.2009 passed by the Commissioner of Central Excise (Appeals), Coimbatore)
Hindustan Pencil Pvt. Ltd. Appellant
Vs.
CCE, Coimbatore Respondent
Appearance None for the Appellant Shri R. Subramaniyam, AC (AR) for the Respondent CORAM Honble Shri D.N. Panda, Judicial Member Honble Shri R. Periasami, Technical Member Date of Hearing / Decision: 15.04.2015 Final Order No. 40414 / 2015 Per D.N. Panda Appellant has asked for early hearing of the appeal. But remained absent filing the application.
2. In the application above it is brought out that the case of the appellant is covered by the decision of this Bench in the case of Umesh Pencil Processors Pvt. Ltd. Vs. CCE, Coimbatore reported in 2011 (267) ELT 74. Tribunal held in favour of that assessee and such decision was upheld by Honble Supreme Court dismissing civil appeal of Revenue reported in 2011 (267) ELT A23 (SC).
3. In view of the prayer above, the record was examined and the earlier decision of the Tribunal was also gone into. Learned Commissioner (Appeals) in the present case in para 5.15 has held that mixture of graphite and clay coming into existence is marketable product. He upheld the classification made by the adjudicating authority in respect of such goods under Heading 6815 1020 discarding the claim of the appellant that it is not liable to duty for no marketable goods manufactured.
4. Above issue was before Tribunal in Umesh Pencil Processors (supra). In para 2 of the reported order, Tribunal very categorically examined the issue as to whether mixture of graphite and clay used captively in manufacture of pencil would amount to manufacture. While examining the issue, Tribunal has also gone into the marketability aspect of the case. In para 5 of the order, Tribunal observed that the mixture having a short life does not have the possibility of marketing. Meaning of the goods was examined by the Tribunal in that para in the light of judgment United Phosphorous reported in 2000 (117) ELT 529 (SC). Ultimately, Tribunal came to the conclusion that mixture of graphite and clay cannot be bought and sold in absence of evidence of any marketability. Therefore, assessee succeeded in that appeal.
4. The aforesaid guiding decision of the Tribunal met the test of the Supreme Court in Civil Appeal No. D/15603/2010 filed by Revenue. But, Revenue failed thereat.
5. In view of above, it would be appropriate to reproduce paragraphs 5 to 7 of the decision of the Tribunal in Umesh Pencil Processors (supra) to appreciate the rationale behind the decision of the Tribunal:-
5. After hearing both sides, and on perusal of the records, it is revealed from the order of the Commissioner (Appeals) that the mixture of graphite and clay is not bought or sold in the market. The ld. Advocate submits that this mixture has a short life and used captively in the manufacture of pencil lead which attracts Nil rate of duty. The Commissioner (Appeals) observed that the appellant availed the exemption notification and, therefore, it will be treated as excisable goods. In this context, the ld. Advocate contended that, inadvertently, they availed exemption notification and thereafter they contested the excisability of the goods. It is well settled that no product is goods unless shown to be marketable by the department. In the case of United Phosphorous Ltd. (supra), the Honble Supreme Court observed that mere specification in the Dictionary, Excise Tariff and Drawback Schedule is of no consequence. The relevant portion of the decision of the Honble Supreme Court in the case of United Phosphorus Ltd. is reproduced below:-
4. In the case at hand the Collector (Appeals) has found that the above said three intermediate products came into existence at a certain stage of a multiple stage integrated chemical process leading to the final products and therefore they could not be held to be goods as understood in commercial parlance because they were not marketable. The department had failed in showing if any facility existed for separation of the said three products and whether in the form in which the said three products came into existence in the reaction process were capable of being marketed. The finding of fact so arrived at has not been challenged much less dislodged before the Tribunal. The only argument advanced before the Tribunal was that the three items were mentioned as goods in the dictionary and in the excise tariff and Mercuric Acetate (MA) was also mentioned as one of the items entitled to drawback in Duty Drawback Rules. The Tribunal has observed that these facts and mere mentioning of an item in Drawback Rules with reference to a different context was not enough to satisfy the test of marketability unless it was shown that the intermediate products were capable of being taken to market and bought and sold.
6. We have noticed that the Tribunal in the case of Camlin Ltd. (supra) rejected the appeal filed by the Revenue on the same goods as there is no evidence whatsoever that the mixture of graphite and clay is at all marketable. We find that, in the present case, both the authorities below accepted the position that the mixture of graphite and clay cannot be bought or sold. The department failed to produce any evidence that the goods are marketable.
7. In view of our discussion above, the demand of duty and penalty cannot be sustained. Accordingly, the impugned orders are set aside and the appeals are allowed with consequential reliefs. Stay applications are disposed of.
6. The present case being within the four of the case of Umesh Pencil Processors (supra), both, early hearing application and appeal are allowed and refund if any will flow in accordance with law.
(Dictated and pronounced in open court)
(R. PERIASAMI) (D.N. Panda)
Technical Member Judicial Member
Rex
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