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3.4 He has further submitted that for the Financial Year 2002-03, the learned Commissioner has dropped the demand in respect of three projects viz., Call Centre, Info-kiosk and HDSL NMS for HDSL, however, confirmed duty on total expenditure of Rs.496.46 lakhs for 14 projects.

3.5 Discussing each of the projects for the Financial Year 2002-2003 which has been confirmed by the Commissioner, the learned advocate has submitted that:

(i) ISDN Phone: The development of this phone was taken up against TEC specification and was offered for TEC evaluation. The evaluation could not be completed as TEC changed its specification. Though interface approval was obtained the same could not be commercially exploited. The observations of the learned Commissioner that ITI have successfully developed the ISDN phone and subsequently 25 Nos.

have been manufactured at their premises. The E/374/2012 assumption that "it is implied that the prototype of the said product was successfully cleared and deployed by ITI", is based on assumptions and not on facts. A product or goods are not liable for duty unless such products are cleared from the place of manufacture. In the instant case, since TEC have changed the specification of ISDN phone, the same cannot be offered for marketing. Further, there is nothing on record to show that the said 25 Nos. os ISDN phones were captively consumed. It is now settled law that unless a product is marketable, the same is not liable to duty.

       (i)     CTI PABX
       (ii)    Call Centre
       (iii)   IP PABX
       (iv)    CTI Controller
       (v)     Infokiosk
       (vi)    Power Group
       (vii) NMS for CIVICON


3.7    He submits that for the remaining 14 projects, the
appellants submitted that:


 i.    ISDN Phone: In the instant case the development of this

phone was taken up against TEC specification and was offered for TEC evaluation. The evaluation could not be completed as TEC changed its specification. However, Interface approval was obtained but the same has to be commercially exploited. The observations of the Ld. Commissioner that it is implied that the prototype of the said product was successfully cleared & deployed by ITI, is based on assumptions and not on facts. A product or goods are not liable for duty unless such products are cleared from the place of manufacture. In the instant case, since TEC have changed the specification of ISDN Phone, the same could not be offered for marketing. It is now settled law that unless a product is marketable, the same is not liable to duty.

11. The learned Commissioner in the impugned order has discussed in detail the prototypes cleared on project-wise for the Financial Year 2002-03 and Financial Year 2003-04. For the Financial Year 2002-03, he has discussed all total 14 projects viz., (i) Call Centre; (ii) ISDN phone; (iii) ADSL; (iv) Frequency Agile Digital Radio; (v) Blue Tooth; (vi) INFOKIOSK; (vii) OLTE Redesign; (viii) 2/34 OPTIMUX Redesign; (ix) HDSL NMS for HDSL; (x) 16KBPS SCG; (xi) 2/8 OPTIMUX; (xii) Encryption for Carnation; (xiii) Earth Station for RCPC; and (xiv) MCPC VSAT (10+1) CH. Against each of the project, the learned Commissioner taking note of the written submission furnishing details of projects filed by the appellant during the course of de novo proceedings and after due analysis, dropped the demands E/374/2012 relating to projects on (i) call centre; (ii) INFOKIOSK and (iii) HDSL NMS for HDSL; whereas for other projects, he has confirmed the demands for clearances made to the said projects after considering the submissions advanced by the appellant and on scrutiny of the same in the light of the test of marketability, and principles of manufacture discussed above. For example: In the case of ISDN phone, the learned Commissioner referring to written submissions of the appellant observed that development of phone was offered against specification of Technical Engineering Centre, Department of Telecom, Government of India. Even though, it was not commercially exploited but in their closure of work order, it is stated that the same has been successfully developed and subsequently 25 Nos. have been manufactured at their premises. He has concluded that the prototypes manufactured were successfully cleared and deployed by ITI, accordingly, excise duty is leviable. The appellant in their submissions argued that the finding of the Commissioner is based on assumptions and presumptions and not on facts as the products are not leviable to duty unless such products are cleared from the place of manufacture. However, they have not provided any explanation in their written submission nor evidences have been adduced to show that how these prototypes are disposed of by the appellant, in the event the ITI has changed the specification of ISDN phone could not be marketed. In the absence of any such evidence, the claim being not substantiated, therefore, cannot be considered.