1998 (2) TMI 182 - AT - Central Excise

Magnesium bisulphite (cooking liquor) - Captively consumed for manufacture of pulp - Excisability - Demand - Limitation

Summary

Issues:
Classification of product for excise duty, marketability of the product, stability of the product, limitation period for duty demand, imposition of penalty.

Classification of Product for Excise Duty:
The appellant contended that the product, magnesium bisulphite, was not marketable and therefore not excisable under Central Excise Act. The appellant argued that the burden of proving marketability lies on the Revenue. The appellant cited various Supreme Court judgments to support their argument. The Tribunal observed that the product's excisability depends on its marketability, which needs to be proven by the Revenue. As evidence of marketability was lacking, the matter was deemed fit for remand to the Commissioner of Central Excise for further examination.

Stability of the Product:
The appellant claimed that the product was unstable and would lose its properties if not used within a specific time. The Chemical Examiner's report did not provide a clear opinion on the stability of the product, raising doubts about its stability. The Tribunal found a lack of conclusive evidence regarding the stability of the product, as no technical opinions or literature were presented by the appellant to support their assertion. The issue of stability remained unresolved due to insufficient evidence.

Limitation Period for Duty Demand:
The appellant argued that the demand for duty, issued almost three and a half years after the department became aware of the product's manufacture, was barred by time. The Tribunal agreed with the appellant, noting that there was no evidence of wilful misstatement, suppression of facts, or contravention of rules by the appellant to evade duty payment. Consequently, the demand for duty of Rs. 10,56,459/- was set aside as time-barred.

Imposition of Penalty:
Considering the circumstances of the case, the Tribunal found no justification for imposing a penalty on the appellant. As there was no evidence of intentional wrongdoing or violation of rules by the appellant, the penalty of Rs. 10,000/- was also set aside. The Tribunal disposed of the appeal by setting aside both the duty demand and the penalty imposed on the appellant.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the Tribunal's assessment of the evidence and legal principles involved, and the final decision reached on each issue raised in the case.