Customs, Excise and Gold Tribunal - Mumbai
Automobile Corporation Of Goa Ltd. vs Commissioner Of Central Excise Goa on 20 February, 2001
Equivalent citations: 2001(132)ELT64(TRI-MUMBAI)
ORDER
Gowri Shankar, Member (Technical)
1. Appeal is taken up for disposal after waiving deposit with consent of both sides.
2. The appellant manufactures and fits bodies to chassis of buses. It sends steel sheets to its sheet metal division, a separate licensee, for making the shapes and section, which when assembled on the chassies constitute the body. After the receipt of these sections, the appellant mounts them and joins them on the desired order on the chassies resulting in the emergence of a body.
3. No duty was paid on the fabrication of the shapes and sections by the sheet metal division; the benefit of notification 214/86 as amended was claimed. The notification inter ali exempts goods manufactured in a factory on job work and used in relation to manufacture of final products, specified in column 2 to Table to notification on which duty is leviable. There is no doubt that motor vehicles are among the final products specified in column 2 of the Table.
4. During the financial year 1993-94, body building was exempted from payment of duty by notification 63/93. The department therefore issued notice alleging that, since excise duty was not leviable on the final product, the benefit of notification 214/86 would not be available. Adjudicating on this notice, the Asst. Commissioner confirmed the proposal in the notice. He did not accept one of the contentions raised before him that the shapes and sections were not marketable. The Commissioner (Appeals) to whom the manufacturer appealed received this argument regarding marketability more favourably. He declined to accept the Dy. Commissioner's view that the use by the bodybuilding division of the appellant established the existence of a market for these items, noting that they were manufactured on job work. He noted that such items could possibly be sold for making bodies by any other person, and therefore the fact of the goods having been made of job work could not lead to the conclusion that they were not marketable. He remanded the matter to the adjudicating authority to verify the marketability of "each and every item fabricated by SMD (sheet metal division)."
5. The Dy. Commissioner to whom the matter was remanded has concluded that the goods are not marketable for the following reason:
"8. The fabricated items were physically verified on 24.9.97.
9. In view of the record of the case and my observation during physical verification of the fabricated item in question
(a) I hold that the items being fabricated at sheet metal division out of the raw material supplied by the bus body division are not excisable items as these cannot be sold in the market."
He accordingly dropped the demand.
6. The department appealed this order to the Commissioner (Appeals). The ground in the appeal was that "a market did exist for the said item inasmuch as ACGL (BED) has a use for the fabricated item. The fabricated items are distinct in commercial parlance and used and metal sheets for which they were made."
7. The Commissioner (Appeals) accepted the ground in the appeal. He said the respondent before him "has an use for the fabricated item in question, the concept of marketability is of a deemed nature here and the said fabricated items in question only on being further used by the respondent in question that the final product bus bodies comes into existence, as such the said process of fabrication of parts/components are not only incidental/ancillary in the manufacturing processes undertaken by the respondents, without which the final resultant product viz. Bus body will not come into existence."
8. Before us, the counsel for the appellant and the departmental representative reiterate the contention taken by the manufacturer and the stand of the department with regard to marketability.
9. It will be evident from the portions of the record that we have reproduced that at no level has this question of marketability gone into with the attention that it deserved. We do not find it possible to agree that, merely by listening to the submission of the manufacturer and examining the goods, the Dy. Commissioner could conclude that they were not marketable. Nor do we find acceptable the stand of the department that merely because a process of manufacture may be involved, the goods must be "deemed" to be marketable. Manufacture and marketability are two distinct aspects. The processes to which the article is subjected could be manufacture for the purpose of Central Excise if the process results in the emergence of a commodity that as a distinct name, character and use than the material which was subjected to these processes. Even after such manufacture, however, that commodity may still not be capable of marketed in that it cannot be taken in the market for being bought and sold. This is necessarily before it can be said to be "goods" which are liable to excise duty. The article may be immovable property, which cannot be taken to the market, or ephemeral in existence preventing it to be taken to the market. It may have no use for anyone but its manufacturer and hence may not be bought. It is therefore not enough to say that because the item is a result of manufacture it is marketable.
10. As a result of the discussion before us, both sides agree that the matter should be remanded to the adjudicating authority for him to decide, clearly and by issue of a speaking order, whether the goods are marketable i.e. whether they are capable of being taken to the market for being bought and sold. Either side is at liberty to adduce fresh evidence. The adjudicating authority shall thereafter pass orders in accordance with law.
11. The appeal is accordingly allowed, and the impugned order set aside.