TMI Blog2010 (4) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... product is excisable only if it is a complete product having commercial identity capable of being sold to a consumer which has to be established by the Revenue. - The mere theoretical possibility of the product being sold is not sufficient but there should be commercial capability of being sold – decided in favor of assessee - 2377 OF 2002 - - - Dated:- 12-4-2010 - JUDGMENT K.S. RADHAKRISHNAN, J. 1. The question that arises for consideration in this appeal is whether unvulcanised sandwiched fabric assembly produced in the Assessee's factory and captively consumed can be termed as "goods" and can be classified as "rubberized cotton fabrics" falling under sub-heading number 5905.10 of the schedule to the Central Excise Tariff Act, 1985. 2. The above question came up for consideration before the Customs, Excise and Gold (Control) Appellate Tribunal (for short 'the Tribunal). The Member (Judicial) took the view that the product would not attract duty unless it is established that the goods in question is marketable or capable of being marketed as a distinct product and that the Revenue has failed to discharge the burden to prove the marketability and dutiability of the inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed fabric is nothing but rubberized, water proof fabric with a thin layer of rubber sandwiched between two sheets of cotton fabric in running length. As a result of that process a double textured fabric emerges as a distinct product with specific properties and character other than that of original fabric used as input which is known in commercial trade parlance as double textured fabric which is used in considerable quantities for making raincoats, holdalls, hand bags etc. 7. The Collector therefore, came to the conclusion that this double textured fabrics are marketable products fulfilling the requirement of the definition of excisable goods as per Section2(d) of the Central Excise 1944 (in short the Act) attracting the levy of central excise duty under the Act. The Collector then issued a show cause notice dated 29.03.1995 to the assessee stating it had manufactured and cleared double textured fabric valued at Rs.7,96,43,247/- for captive consumption in the manufacture of shoe-uppers used in 2,51,29,646 numbers of exempted canvas shoes without payment of duty amounting to Rs.88,80,782/- during the period from 01.04.1990 to 31.08.1994 without the cover of excise gate pass, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report dated 20.10.1994, the SSB hand book of rubber products and the statement of Superintendent (Supply and Transportation) of the assessee's company which are insufficient to hold that product is marketable or capable of being marketed. On the other hand assessee has produced sufficient materials to establish that the material used by the assessee is not marketable and has no commercial identity. 10. Shri Narain also submitted that marketability is an essential ingredient to hold whether a product is dutiable or excisable and it is for the Revenue to prove the same. Learned counsel also submitted that it is not the function of the Tribunal to enter into that arena and make suppositions, rather it should examine the question whether sufficient materials have been produced by the Revenue to discharge its burden. In support of his contention learned counsel placed reliance on various decisions of this court such as Hindustan Ferodo Ltd. vs. Collector of Central Excise, Bombay (1997) 2 SCC 677; Union of India vs. Sonic Electrochem (P) Ltd. (2002) 7 SCC 435; Cipla Ltd. vs. Commissioner of C.Ex., Bangalore 2008 (225) ELT 403 (SC).; Gujarat Nermada Valley Fert. Co. Ltd. vs. Collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994) 2 SCC 428 and various other decisions, wherein this Court held that the marketability is essentially a question of fact to be decided on the facts of each case and there can be no generalization, and the fact that goods are not in fact marketed is of no relevance and the question whether they are capable of being marketed. Admittedly, the assessee is not marketing the product but still the question is whether the product is capable of being marketed. 13. The Revenue in this case has not produced any material before the Tribunal to show that the product is either been marketed or capable of being marketed but expressed its opinion unsupported by any relevant materials. This Court in Hindustan Ferrado Limited (supra) explained the function of the Tribunal in such situations as follows:- "It is not the function of the Tribunal to enter into the arena and make suppositions that are tantamount to the evidence that a party before it has failed to lead. Other than supposition, there is no material on record that suggests that a small scale or medium scale manufacturer of brake linings and clutch facings "would be interested in buying" the said rings or that they are marketable a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the EMR of the respondents, is not 'goods' so as to be liable to duty as parts of EMR under para 5(d) of the said exemption notification." 16. In Gujarat Narmada Valley Fertilisers Corporation (supra), this Court was dealing with the question whether the intermediate chemicals which are formed in the process of manufacture Butachlor are liable to tax under the Salt Act and held that the test report produced by the Revenue will not establish the marketability of the product. It further held that unless the product is capable of being marketed and is known to those who are in the market as having an identity as distinctly dentifiable that the article is subject to excise duty, the product cannot be treated as a product that is marketable. Marketability cannot be established by mere stability of the product. Something more would have to be shown to establish that the products are known in the market as commercial product. 17. In Cipla Limited (supra) this Court was examining the question whether Benzyl Methyl Salycylate (BMS) is marketable and therefore liable to excise duty. After referring to various earlier decisions of this Court, it was held that marketability is an es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion) of the assessee's company do not show that the product in question is capable of being marketed. The mere theoretical possibility of the product being sold is not sufficient but there should be commercial capability of being sold. Theory and practice will not go together when we examine the marketability of a product. On the other hand materials produced by the assessee i.e. affidavit of Mr. Shomnath Chokravarty, Consultant - Rubber and Plastic Technology, affidavit of the Production Manager of the assessee Company, certificate of Prof. C.K.Das, IIT, Kharagpur, affidavit of Ms. Parvati Pada Mukherjee, certificate from Footwear Design and Development Institute, Ministry of Commerce, Government of India and The Vanderbilt Rubber Handbook, would show that the product in question is only an intermediary product generally used for captive consumption which has no commercial identity as such. 20. We are also of the view that no reliance can be placed on the Division Bench Judgment of the Calcutta High Court reported in Union of India (UOI) vs. Bata India Ltd. 1993 (68) ELT,756 (Cal) since this Court while dismissing SLP(C)No.6146 of 1993 filed by the assessee against the above ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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