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TMI Blog2009 (5) TMI 402X X X X Extracts X X X X X X X X Extracts X X X X ..... art from manufacture such profiles on their own account, also undertakes to manufacture such profiles/extrusions on job work basis. Appellant No. (2) herein is a manufacturer of water filters/purifiers and parts thereof, and has manufacturing unit all over India. In these cases, the issue involved is in respect of factory at Bhimtal, Uttarakhand State. 4. Appellant No. (2) was procuring aluminium ingots on payment of duty and after availing Cenvat credit was sending the same to appellant No. (1) for job-work, manufacture of aluminum extrusions. For the said activity appellant No. (1) was paid agreed conversion charges. The raw materials/inputs were sent to appellant No. (1) by following the procedures provided under Notification No. 214/86-C.E., dated 25-3-1986. Directorate General of Central Excise (Intelligence), Chennai conducted investigations against appellant No. (1) and appellant No. (2) and recorded various statements of the appellants as well as the personnel of appellant No. (2). On the basis of the investigations conducted, it was noticed by the lower authorities that appellant No. (1) was evading the Central Excise duty, hence the show cause notice dated 3-10-2007 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aluminium Extrusions/Profiles valued at Rs.12,35,45,681/- cleared by M/s. Alumeco India Extrusions Ltd., Kallakal, without payment of duty during the period from December, 2003 to March, 2007, in terms of proviso to Section 11A(1) of the Central Excise Act, 1944. (b) I appropriate an amount of Rs.50,75,000/- already paid by them towards the amount of duty demanded as mentioned at Sl. No. 1 above. (c) I order M/s. Alumeco India Extrusions Ltd., Kallakal, to pay interest at the appropriate rate on the amount of duty of Rs.2,01,18,058/- in terms of Section 11AB of the Central Excise Act, 1944. (d) I appropriate an amount of Rs.11,75,000/- already paid by M/s. Alumeco India Extrusions Ltd., Kallakal, towards the amount of interest payable as mentioned at Sl. No. 3 above. (e) I impose a penalty of Rs.2,01,18,058/- (Rupees Two Crores one lakh eighteen thousand and fifty eight only) on M/s. Alumeco India Extrusions Ltd., Kallakal, in terms of Section 11AC of the Central Excise Act, 1944 for the contraventions alleged supra. (f) I appropriate an amount of Rs.12,68,575/- already paid by M/s. Alumeco India Extrusions Ltd., Kallakal, towards the penalty imposed as mentioned at SI. No. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mandates the payment by principal supplier. It is his submission that there was no suppression of any sort on the part of the appellant No. (1) as they have informed the Revenue Authorities while filing the monthly returns, about their activity of doing job work. He would draw our attention to the O-I-O and more specifically paragraph 30. It is his submission that the entire records of appellant No. (1) was audited by the authorities including EA 2000 audit. It is his submission that the entire case is time barred as the copy of the declaration made by appellant No. (2) to the authorities in Uttarkhand was sent to the local authorities in Hyderabad. It is his submission that the Adjudicating Authority has totally misdirected in holding that the raw materials were not received under the specified documents as provided in Cenvat Rules. It is also the submission that the Adjudicating Authority has over-looked the fact that several duty paying documents were made available to the Investigating Authority, under which the duty amounts paid, and the said details were cross checked and verified by the officers of DGCEI. It is also the submission that the assessable value is improperly work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... water purifier. 8.4 In the Order-in-Original the Commissioner has observed that mere mention of the goods in the First Schedule to the Central Excise Tariff Act, would show that the extrusions in question are excisable goods. Further it is observed that the Aluminium Extrusions/Profiles manufactured on job-work basis and cleared to the appellants are marketable as these extrusions are cleared in the market, which is purchased by different customers. 8.5 The appellants submit that the extrtision/profile as it emerges and gets cleared from the premises of M/s. Alumeco India Extrusion Ltd. is in the nature of an intermediate product and is neither capable of being used by any other manufacturer nor is it capable of being bought and sold in the market. Therefore the issue in question revolves around the fact whether the goods in question are covered within the meaning of the expression 'excisable goods' under Section 2(d) of the Act. 8.6 The appellants submit that merely because a certain article falls within the Schedule it would not be dutiable under excise law if the said article is not "goods" known to the market. Manufacture and marketability, therefore, is an essential ingred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 2003 (152) E.L.T. 262 (S.C.) (e) CCE, Chandigarh v. Metro Tyres Ltd. - 2005 (181) E.L.T. 176 (S.C.) (f) Hindustan Zinc Ltd. v. CCE - 2005 (181) E.L.T. 170 (S.C.) (g) Commissioner, Raipur v. Orissa Concrete & Allied Industries - 2001 (127) E.L.T. 178 (T) = 2004 (41) R.L.T. 540 (CEGAT) (h) Himalaya Drug Company v. CCE, Delhi-I - 2005 (187) E.L.T. 427 (Tri.-Bang.) 8.11 The appellants submit that the gist of the decisions referred supra is that the capability of the product to be marketed at the time of removal is an essential pre-condition of levying the same to duty of excise and the onus to prove so lies upon the Revenue. In present the burden to prove that the goods are marketable and hence excisable, falls on the department. 8.12 The Order-in-Original has failed to establish as to how the profiles/extrusions can be subjected to excise duty without first establishing its marketability. The Commissioner concluded on the assertions that the goods are marketable as they find mention in the Tariff and because the job workers M/s. Alumeco India Extrusion Ltd. were manufacturing extrusions/profiles independently and paying duty on such clearances to the market. 8.13 The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A124 (S.C.) (d) CCE, Jamshedpur v. SAIL - 1998 (103) E.L.T. 298 (Tri.) (e) Shankar Packaging Pvt. Ltd. v. CCE, New Delhi - 1999 (111) E.L.T. 655 (Tri.) (f) Paper Product Ltd. v. CCE, Calcutta-III - 2001 (130) E.L.T. 215 (Tri.-Kolkata) 8.20 The Hon'ble Supreme Court again in the case of UOI v. Ahmedabad Electricity Co. Ltd. reported in 2003 (158) E.L.T. 3 (S.C.) held that even if any intermediate product emerging in the factory is sold for a small price due to inevitability, it would not render such a product marketable in the commercial sense. 8.21 The appellants submit that though the show cause notice demands duty from M/s. Alumeco, the appellants would be entitled to raise all questions relating to excisability of the product as also the issue relating to limitation when a common proceeding is initiated for both levy of duty and imposition of penalty. 8.22 The appellants submit that their jurisdictional Central Excise Officers were always aware that they were availing the exemption Notification. No.50/2003-C.E. from 1-10-2003 onwards. The jurisdictional Central Excise authorities of the appellants were also aware that the appellants were not availing the Cenvat facility a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led by them for their Bhimtal factory cannot be considered as an exemption notification which exempts goods manufactured irrespective of the location of the factory. 8.27 Notification No. 214/86-C.E. generally would not apply where the goods are either wholly exempt or partly exempt but in fact allows removal without payment of duty from the raw material suppliers premises either for export or clearances to 100% EOUs etc. While clearances for export under bond are permitted without payment of duty under Rule 19 of the Central Excise Rules, 2002 removal to 100% EOU is exempted by Notification No. 22/2003-C.E. This situation is also akin to the area based exemptions and cannot be compared with an unconditional exemption granted to excisable goods either in part or in whole manufactured by a manufacturer located at in any part of the country. 8.28 The appellants, therefore, submit that the provisions of Notification No. 214/86-C.E. had to be appreciated in the above perspective and it could not have been intention of the Government to levy duty at an intermediate state though the final product manufactured in a specified area is exempt. The appellants, therefore, submit that when vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that appellant No. (1) has recorded the receipt of the inputs and marketable products in the register, which had been prescribed. 11. Learned Counsel Shri Shiva Dass in his rejoinder would submit that penalty under Rule 26 is not at all applicable as the decision of the Larger Bench in the case of Steel Tubes of India v. CCE, Indore as reported at 2007 (217) E.L.T. 506 (L.B.) is, applicable. It is his submission that the profiles which are manufactured and cleared by appellant No. (1) to appellant No. (2) is not marketable in that condition. It is his submission that the decision of the A.P State Electricity Board (supra) is considered by the Supreme Court in the case of Cipla Ltd. (supra). It is his submission that revenue has not led any evidnece regarding the marketability of the product. It is his further submission that evidence of sale and purchase of the products is from 01.04.2007 and hence, will not cover the earlier period. 12. We have considered the submissions made at length by both sides and perused the records. 13. Undisputed facts are that appellant No. (1) is job worker of appellant No. (2). It is also undisputed that appellant No. (2) sends raw materials to appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Tariff Act, 1985, under Chapter Heading No. 7604 and hence the said Aluminium Extrusions /profiles are excisable goods. Further, these excisable goods are manufactured in India i.e. by M/s. AIEL, Hyderabad. The definition of "manufacture" under Section 2(f) of Central Excise Act, 1944 is not confined to the natural meaning of the word but is an expansive definition. The question whether a particular process does or does not amount to manufacture is always a question of fact to be determined in the facts of a given case applying the principles enunciated by the Hon'ble Supreme Court. One of the main test evolved by the Court is whether on account of processes employed or applied by the assessee, the commodity so obtained is no longer regarded as the original commodity, but is, instead, recognized as a distinct and new article that has emerged as a result of the process as held by the Hon'ble Supreme in the case of M/s. Ujagar Prints case- 1988 (38) E.L.T. 535 (S.C.) and Collector v. S.D. Fine Chemicals - 1995 (77) E.L.T. 49 (SC). Now in the present case, the raw materials i.e. Aluminum ingots were used in the manufacture of Aluminium Extrusions/Profiles, by M/s. AIEL. The pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding that the definition of "manufacture" includes everything, which undergoes a change. We find that the learned Adjudicating Authority has misdirected himself on this ground. The Hon'ble Supreme Court in the following cases has clearly held that "marketable" means the goods which are known to the market in which they are known. The case laws are: (a) Moti Laminates Pvt. Ltd. v. CCE - 1995 (76) E.L.T. 241 (S.C.) (b) Hyderabad Industries Ltd. v. Union of India - 1995 (78) E.L.T. 641 (c) UOI v. Sonic Electrochem Pvt. Ltd. - 2002 (145) E.L.T. 274 (S.C.) (d) UOI v. Delhi Cloth & General Mills Co. Ltd. - 1997 (92) E.L.T. 315 (S.C.) 14.2 All the above referred case laws clearly cover the issue in favour of the appellant in respect of the marketability. 15. Further, it is well settled law that the burden to prove marketability is always on the revenue and not on the assessee. This issue is settled by the Hon'ble Supreme Court in the case of Collector of Central Excise v. Ambalal Sarabhai Enterprises as reported at 1989 (43) E.L.T. 214 (S.C.). This principle has been followed by various decisions and it was held that if there is manufacture of article before the same is chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible. Simply because a product is mentioned in the Chemical Weekly Drug Directory as intermediate product does not mean that the product is marketable. The Judicial Member was, therefore, right in observing that BMS being used in the manufacture of final product, i.e. Salbutamol Sulphate was neither marketed nor marketable and was only an intermediate product. Since marketability is an essential ingredient to hold that a product is dutiable or exigible, it was for the Revenue to prove that the product was marketable or was capable of being marketed. Manufacturing activity, by itself, does not prove the marketability. The product produced must be a distinct commodity known in the common parlance to the commercial community for the purpose of buying and selling. Since there is no evidence of either buying or selling in the present case, it cannot be held that the product in question was marketable or was capable of being marketed. Mere transfer of BMS by the appellant from its factory at Bangalore to its own unit at Patalganga for manufacture of final product does not show that the product was either marketed or was marketable. Since the Revenue has failed to lead any evidence to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ingots for the purpose of job work for Aluminium Extrusions to M/s. Pennar Profiles Ltd., Kallakal Village, Toopran Mandal, Medak Dist. We shall follow the prescribed procedure and documentation in this regard and also we undertake the responsibility of discharging the liability in respect of Central Excise Duty leviable on the Final Product in terms of provision 2 of Notification No. 214/86 dated 25-3-1986, as amended. We are enclosing herewith prescribed proforma in triplicate. The same may kindly be acknowledged. Thanking you, Yours faithfully For AQUAMALL WATER SOLUTIONS LTD. AUTHORISED SIGNATORY Copy to: 1. The Asst. Commisioner of Central Excise, Haldwani F Division, Haldwani 2. The Superintendent of Central Excise, Tallital Range, Bhimtal 3. The Superintendent of Central Excise, Toopran Range, Hyderabad INTIMATION LETTER TO REMOVE INPUTS OR PARTIALLY PROCESSED GOODS UNDER RULE 4(5) OF CENVAT CREDIT RULES 2002 AS AMENDED READ WITH PROVISION 2 OF NOTIFICATION NO. 214/86-C.E. DATED 25-3-1986. - Commissionerate : Hydrabad II Divison : Hydrabad "C" Range : T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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