2005 (12) TMI 354 - AT - Central Excise

Summary

Issues: Determination of marketability and liability to duty of sheet metal subjected to processes in manufacturing units.

Analysis:
1. Marketability of the items: The case involved two manufacturing units - Sheet Metal Division (SMD) and Bus Body Division (BBD) - both engaged in activities related to sheet metal processing and building bodies on chassis. The appellants contended that the sheet metal subjected to processes like cutting, punching, bending, and forming at SMD were crude and unfinished, not capable of being marketed or sold as goods. The Deputy Commissioner, after visiting SMD, held that these items were not marketable, leading to the dropping of the duty demand raised in show cause notices. However, the Commissioner (Appeals) reversed this decision, stating that the items had use in building bodies and were therefore marketable. The Tribunal, after reviewing the lower authorities' orders, found merit in the appellants' contention that the impugned goods did not meet the tests of manufacture and marketability. They emphasized the lack of evidence from the department showing marketability, ultimately setting aside the previous order and allowing the appeal in favor of the appellants.

2. Liability to duty: The issue of liability to duty arose from the conflicting views on whether the sheet metal processed at SMD and used in BBD for building bodies was subject to excise duty. The original authority and the lower appellate authority had both ruled against the appellants during the remand proceedings. The appellants argued that the impugned goods were unfinished and specific to their use in building bodies, not standard market items. The Range Superintendent's report supported this claim, stating that the items were neither fully manufactured nor marketable. Despite this, the original authority did not consider this report. The Tribunal, after careful consideration, agreed with the appellants that the impugned goods did not qualify as manufactured or marketable items, leading to the allowance of the appeal with consequential benefits for the appellants.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Mumbai delved into the intricacies of marketability and liability to duty concerning sheet metal processed in manufacturing units. The decision highlighted the importance of meeting the criteria of manufacture and marketability for goods to be subject to duty, ultimately ruling in favor of the appellants based on the lack of evidence supporting marketability and the specific nature of the processed sheet metal items.