Custom, Excise & Service Tax Tribunal
Commissioner, Central Excise & ... vs M/S. Balkrishna Tyres Ltd on 21 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/25/05 [Arising out of Order-in- Appeal No. BPS(332) 107& 108/2004 dtd. 20/9/2008 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad] For approval and signature: Honble Mr. P.K. Jain, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
=======================================================
Commissioner, Central Excise & Customs, Aurangabad
:
Appellants
VS
M/s. Balkrishna Tyres Ltd.
:
Respondent
Appearance
Shri. N.N. Prabhudesai, Superintendent(A.R.) for the Appellants
Shri. Prasad Paranjape, Advocatefor the Respondent
CORAM:
Honble Mr. P.K. Jain, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 21/1/2015
Date of decision /2/2015
ORDER NO.
Per : Ramesh Nair
The Appeal is directed against Order-in- Appeal No. BPS(332) 107& 108/2004 dtd. 20/9/2008 passed by the Commissioner of Central Excise & Customs (Appeals), Aurangabad, wherein Ld. Commissioner(Appeals) set aside the order of the original authority and allowed the Appeal of the respondent. The facts of the case is that the respondent, manufacturer M/s. Balkrishna Tyres Ltd is engaged in the manufacture of exempted [Animal Driven Vehicle Tyres(ADV)]. They also manufacture Rubberized Tyre Cord Fabric and Rubber Tread Compound and consumed captively in the manufacture of exempted ADV tyres. The Revenue issued the show cause notice F. No. 34/C.Ex./2003 dated 4/9/2003 wherein it was proposed to demand Central Excise duty of Rs. 2,86,079.70 on the Rubberized Tyre Cord Fabric and Rs. 11,83,508/- on Rubber Tread Compound, both manufactured and consumed captively for the manufacture of exempted ADV tyres. In the adjudication the Ld. Joint Commissioner, Central Excise & Customs, Aurangabad vide Order-in-Original NO. 27/CEX/JT. COMMR/2004 dated 31/3/2004 confirmed the demand and imposed the penalty on the ground that both the subject goods, they used captively, it is marketable and therefore dutiable goods. Aggrieved by the said order the respondent filed the Appeal before the Commissioners(Appeals), who allowed the Appeal of the respondent vide impugned order saying subjection goods are not marketable. Aggrieved by the said order-in-appeal the Revenue is before me.
2. Shri. N. Prabhudesai, Ld Superintendent (A.R.) appearing on behalf of the Revenue submits that Rubberized Tyre cord fabric is marketable goods and same is sold and purchased in the market. He submits that rubberized tyre cord fabric is very well identified product and the same is known to the market and separate distinguished identifiable commodity. It is his submission that it is not necessary that the manufacturer himself, sale the product in order to qualify it is marketable goods. Even if the goods is not sold by the manufacturer but otherwise it is treated in the market as saleable, it qualifies as marketable goods and therefore rubberized tyre cord fabric being treated in the market as marketable goods, it is liable for duty. As regard the Rubber Tread Compound also he reiterates his submission made in respect of rubberized tyre cord fabric. In addition he referred website printout in respect of product namely black rubber compounds of MIDAS brand, by which it can be proved that this rubber compound is also marketable and the same is sold and purchased in the market, therefore the same is liable for duty. In respect of his above submission he placed reliance on following judgments:
(a) [2003(157) ELT 560 (Tri. Del.)] Good Year (India) Ltd. Vs. CCE
(b) [1994(70) ELT 3(SC)] A. P. Stare Electricity Board Vs. CCE
(c) [2004(166) ELT 145(SC)] CCE Vs. Hindustan Zinc Ltd.
(d) [2004(166) ELT 433(SC)] T. N. State Electricity Corpn. Ltd. Vs. CCE
(e) [2009(236)ELT268(Tri.Bang)] CCE Vs. MRF Ltd.
(f) [2008(232)ELT 260(Tri.Mum) CEAT Ltd. Vs. CCE
(g) 2010(251)ELT A56(Kar.) J.K. Tyre & Industries Vs. Commissioner
(h) [2012(279)ELT 152(Tri-Mum)] Garware Marine Industries ltd. Vs. CCE
(h) [2010 (260) ELT 338(SC) Nicholas Piramal India ltd. Vs. CCE Mumbai He also relied upon the Board Circular No. 566/3/2001-CX dated 22/1/2001. He also submits that the rubber tread compound was also manufactured by job worker on behalf of the appellant since it is independently manufactured in some other unit and brought back to the appellants factory this shows that it is distinct product and therefore marketable.
3. On the other hand, Shri. Prasad Paranjape, Ld. Counsel for the respondent reiterating the finding of the Commissioners (Appeals) order submits that the Revenue at any point of time could not bring any evidence to prove their contention of marketability of the both the products. It is his submission that gereral view can not be applied to hold that goods are marketable. The burden of proof is on the Revenue, the same has not been discharged therefore the ld. Commissioner(Appeals) has correctly held that the goods are not marketable and hence he allowed the Appeal of the respondent. He further submits that the Revenue in the show cause notice as well as in the adjudication order classified the product, rubberized tyre cord fabric under Chapter Heading No. 59.02 whereas the correct classification of the product is 59.06 as held by the Honble Supreme Court in the case of CC Goa & Chennai Vs. MRF Ltd. reported in 2005 (180) ELT 145(SC) . It is his submission that since the demand was confirmed under Chapter 59.02 the same is not sustainable. In support, he placed reliance on this Tribunal judgment in the respondent own case decided vide order No. A/371-371/12/EB/C-II dated 16/3/2012. In support of his contention, he placed reliance on Honble Supreme Court judgment in the case of [2007(209) E.L.T. 11(SC)] Collector of C.EX., Bombay Vs. Neoluxe India Pvt. Ltd. He submits that in the Revenues appeal, one of the ground is that the marketability of the product is proved as assessee themselves have purchased tread rubber compound, he strongly opposed the said ground and stated that the respondent has never purchased rubber tread compound, to this effect he produced an affidavit from the respondent company. In this regard he further contended that there is no mention of alleged purchased of rubber tread compound either in the show cause notice or in the findings of order-in-original. He further submits that both the goods are not marketable therefore not excisable goods and not liable for any excise duty. As regard to the submission of the Revenue that since the rubber tread compound manufactured on job work basis by the job worker it is marketable goods, he submits that merely because the goods were manufactured by job worker it could not be given different identity as compared to the goods manufactured in their own factory. In this regard he placed reliance on the judgment of [2003(151) ELT 644 (Tr-Del) Metro Tyres Ltd. Vs. CCE, Chandigarh, wherein it was held that merely because removal of goods from one part of the factory used in another part can not be ground to hold that the goods is marketable. The similar issue was also decided by the Honble Supreme Court in the case of [2008(225) ELT 403(SC)] Cipla Ltd Vs. CCE, Bangalore, wherein Honble Apex Court held that merely transfer of goods by assessee from his factory at Bangalore to his own unit at Patalganga for manufacture of final product has not shown the product was either marketed or was marketable. He also placed reliance on various judgments as cited below:
(a) [1999(107) ELT 41(Tri)] Everest Rubber Works Vs. CCE, Culcutta-II
(b) [2003(152) ELT 262(SC)] Candila Laboratories Pvt. Ltd. Vs. CCE, Vadodra
(c) 2003(153) ELT 491(SC)] CCE, Chandigarh -! Vs. Markfed Vanaspati & allied Indus
(d) [1990(46) ELT 240(Kar)] Cipla Ltd. VS. UOI
(e) [2005-TIOL-165-SC-CS-LB] CCE, Chandigarh Vs. Metro Tyres Ltd.
4. We have carefully considered the submissions made by both the sides and perused the record.
5. The issue in the present case for our consideration is whether the goods namely rubberized tyre cord fabric and rubber tread compound manufactured and consumed captively are marketable and consequently dutiable or otherwise. As regard rubberized tyre cord fabric, it is observed that demand was raised classifying the said product under Chapter heading 59.02 whereas its correct classification is under Chapter heading 50.06, as held by Honble Supreme Court in the case of MRF Ltd (Supra) as well as in the appellants own case of this Tribunal order dated 16/3/2012 therefore admittedly the demand was confirmed under wrong classification. The Honble Supreme Court in the case of Collector of C.EX., Bombay Vs. Neoluxe India Pvt. Ltd(supra) has held as under :
6.?We do not find any infirmity in the order passed by the Tribunal. Moreover, the point in issue in the present appeal is squarely covered by a judgment of this Court in Collector of Central Excise, Hyderabad v. Bakelite Hylam Ltd. [(1997) 10 SCC 350] Paragraph 30 of the said judgment is extracted below :
It is the contention of the Central Excise Department that industrial laminates and glass epoxy laminates cannot be considered as electrical insulators because these sheets are required to be cut in the requisite shape and holes may have to be punched in them before they could be fitted as insulators. However, mere cutting or punching holes does not amount to manufacture. These sheets have insulating properties and are used as electrical insulators. They cannot be taken out of the category of electrical insulators only because they have to be cut to the requisite shape or a few holes may be required to be punched in them in order that they may fit into the electrical instrument/appliance in question. The Tribunal, therefore, has correctly classified these industrial laminates and glass epoxy laminates under Tariff Item 8546 of the New Customs Tariff (after 1-3-1988) and under Tariff Entry 7014 under the New Customs Tariff up to 28-2-1988. Under the Old Customs Tariff, however, there is no express entry dealing with electrical insulators equivalent to Entry 8546.00 of the New Customs Tariff. Entry 15-A(2) of the Old Tariff will not cover these laminated sheets also for the same reason as in the case of decorative laminated sheets. These sheets, therefore, have been rightly classified under the residuary Tariff Entry 68 of the Old Customs Tariff.
7.?In view of the above decision, the appeal is dismissed leaving the parties to bear their own costs.
From the above Apex Court judgment it is settled position that if the demand is raised under wrong classification, it will not be sustainable. Following the ratio of the above Honble Supreme Court judgment the demand of duty on rubberized tyre cord fabric is not sustainable. As per the various Honble Supreme Court judgment cited by the Ld Counsel for the respondent, to hold the goods as marketable, the burden is on the Revenue to prove that the goods in question is marketable. In the present case the department has not produced any evidence to prove that goods in question are marketable. For this reason also the contention of the Revenue regarding marketability is not acceptable. As regard the product namely rubberized tread compound the department has failed to bring any evidence to prove that the subject goods manufactured and consumed captively by the respondent is marketable and therefore the burden of proving that goods is marketable has not been discharged by the Revenue. Therefore, following ratio of various Honble Supreme Court judgment cited by the respondent it can not be held that the goods is marketable in absence of any evidences. The Product, rubber tread compound has been claimed by the respondent that it has short self life, being only product having short self life can not be sold to any other manufacturer. So considering the nature of the goods also it can not be said that the goods is marketable. As regard, reliance of the Ld. A.R. on the website printout that similar goods is being marketed by the company called MIDAS. On perusal of that print out it is noted therein The Midas range of products now offers compounds made to suit your specifications this shows that the company has recently started marketing the rubber compound in 2015 whereas the present case pertains to the period of Aug- 98 to Nov 2001 and by this print out firstly it can not be said that during the relevant period of this case the same goods were being marketed and it is also not established that the product shown in the printout and the respondents product are same. As regard the contention of the Revenue that since the rubber compound was manufactured on job work basis and is brought from job workers factory to respondents factory the goods is marketable. We observe that under similar facts, in the case of Metro Tyres Ltd and Cipla Ltd.(supra) this issue has been considered and was held that merely if movement of goods from one factory to another factory has taken place and the goods were used for captively the said reason can not be material factor to hold that the goods is marketable. On perusal of the findings of the Ld. Commissioner (Appeals) we observe that the Commissioner (appeals) held the goods not excisable mainly on the ground that the department has not discharged the burden of proof of marketability of the subject goods. In view of our above discussion and considering the ratio of the various judgments, we are of the considered view that the impugned order passed by the Ld. Commissioner(Appeals) is proper and legal the same does not call for any interference. Hence the same is upheld. The appeal of the Revenue is dismissed.
(Operative part pronounced in the Court) P.K. Jain Member (Technical) Ramesh Nair Member (Judicial) sk 10