2003 (5) TMI 116 - AT - Central Excise

Summary

Issues:
1. Interpretation of excise duty liability on denatured Ethyl Alcohol.
2. Determination of whether the product obtained falls under Chapter Heading 22.04 of CET.
3. Assessment of marketability of denatured Ethyl Alcohol for excise duty purposes.

Analysis:
1. The judgment involves an appeal by the Revenue against the order of the Commissioner (Appeals) regarding the excise duty liability on denatured Ethyl Alcohol. The Commissioner found that the appellants were not manufacturing Ethyl Alcohol but denaturing fully manufactured Ethyl alcohol by adding DEPB. The Commissioner concluded that the product obtained after denaturation does not fall under Chapter Heading 22.04 of CET, thereby setting aside the duty and penalties demanded by the lower authorities.

2. The Tribunal, after hearing the arguments and considering the facts, observed that denatured Ethyl Alcohol would be an excisable commodity. However, based on the recorded facts, it was found that denatured Ethyl Alcohol was created at very low temperatures for a short shelf life of not more than 10 minutes. The Tribunal cited a Supreme Court decision regarding the dutiability of intermediate products, emphasizing that for an article to be considered "goods" for excise duty purposes, it must be known or capable of being sold in the market. In this case, the Tribunal found that the alleged excisable entity, denatured Ethyl Alcohol, was not capable of being marketed in a practical manner and hence upheld the Commissioner's finding.

3. The Tribunal, based on the lack of evidence of marketability of the denatured Ethyl Alcohol and following the legal principles laid down by the Supreme Court, dismissed the Revenue's appeals. It was concluded that the goods in question could not be easily brought out for sale in the market, leading to the affirmation of the Commissioner's decision to set aside the duty and penalties.