Customs, Excise and Gold Tribunal - Mumbai
Commissioner Of Central Excise vs Charishma Cosmetics Pvt. Ltd. And J.K. ... on 21 May, 2003
ORDER
S.S. Sekhon, Member (Technical)
1. These two appeals are being disposed off by this common order since the issue involved is the same.
2. Revenue has field an appeal against the order of Commissioner (Appeals) who after considering the material found as follows:-
"I have examined the matter. It is relevant to consider the process of manufacture of the product in question adopted by the appellants. It is stated that the appellants procure extra neutral alcohol which is taken in a mixing vessel and within 10 minutes of time other ingredients like DEP, water, perfume, colour menthol etc. are added together and stirred well and transferred to a chiller for overnight maturation; that next the chiller is started to cool the mixture upto - 8 degrees C to - 5 degree C; that thereafter the mixture is filtered through sparker filter and kept there till it achieves room temperature; that quality control check is done after mixing and after filtration; that DEP was added to alcohol for the purpose of denaturing it and other ingredients are always added with constant stirring; that State Excise Officers are required to witness the addition of DEP to alcohol and entire denaturing process. This is not contested by the department. The entire case has been built up on the grounds that since DEP is added first to denature the alcohol and other ingredients are added after few minutes, denatured ethyl alcohol gets formed in the process as an intermediate goods, which is captively consumed and is liable to excise duty under CSH 2204.10 of CET. It is relevant to consider the Chapter Heading 22.04. Under this heading "Ethyl alcohol of any strength whether denatured or not, but not including alcoholic liquor for human consumption" is covered. It is clear from this heading that this sub-heading covers non potable ethyl alcohol whether denatured or not. This heading thus covers 'Ethyl Alcohol' whether denatured or not. Manufacture of Ethyl Alcohol is covered under this sub-heading. What the appellant are doing is procuring fully manufactured Ethyl Alcohol and then denaturing it by addition of small quantity of DEP. As, the appellants are not manufacturing Ethyl Alcohol, the product obtained in their factory after addition of DEP in Ethyl Alcohol, does not get covered under CSH 22.04."
and thereafter set aside the order of the lower authorities demanding duty and penalties.
3. After hearing the learned advocates and the D.R. and considering the grounds taken, it is found that there they can be no doubt that denatured Ethyl Alcohol would be excisable commodity, yet from the fats as recorded, in the present cases, by the Commissioner (Appeals) and not contested by the Department, as observed from the finding of the Commissioner (Appeals) extracted hereinabove, emerge that extra Neutral Alcohol is cooled to low temperature of - 8 degrees C to - 5 degrees C and thereafter filtered other ingredients are immediately thereafter added, within 10 minutes thereof. Therefore, denatured Ethyl Alcohol comes into existence only at very low artificially created temperatures for a short period of shelf life of not more than 10 Minutes. There is no material on the said denatured Alcohols marketability in the facts of these cases. The Supreme Court in the case of Collector of Central Excise v. Ambalal Sarabhai Enterprises - 1989 (3) E.L.T. 214 (S.C.) held as follows regarding dutiability of such intermediate products which was the required test vide Paras 4, 5 & 6 of the reported decision as follows:-
"The duty of excise is on the manufacture of goods and for an article to be "goods", there must be known in the market as such or they must be capable of being sold in the market as goods. Actual sale is not necessary. User in the captive consumption is not determinative of that the article is capable of being sold in the market or know in the market as goods. Even transient items of articles can be good, provided that they were known in the market as distinct and separate articles having separate uses, there would still become goods with unstable character can be theoretically marketable if there was a market of such transient type of articles but one has to take a practical view on the basis of available evidence. - Tribunal decision in Anil Starch Products v. Collector in Appeal No. ED(SB) T 1534/81-D overruled. [paras 4, 5 and 6]"
In the present case, also, the emergent alleged excisable entity, cannot be judged to be capable off being marketed in a pragmatic manner as denatured Ethyl Alcohol. The goods cannot be considered to be easily brought out, to be bought and sold in the market. Hence, we find no material in the Revenue's appeals to upset the finding as arrived at by the learned Commissioner.
4. The appeals are consequently dismissed.
(Pronounced in Court)