TMI Blog2017 (10) TMI 660X X X X Extracts X X X X X X X X Extracts X X X X ..... omes into existence, at intermediate stage in the form of paste/dough in a continuous process of manufacture and not to the manufacture of odoriferous perfume, which is in liquid form and transported/stored in barrels/drums. The said circular cannot be made applicable to cases beyond its scope - it cannot be said that the agarbathi compound manufactured by the respondent is covered under the aforesaid circular. Whether actual marketing of the perfumery compound manufactured by the respondent is necessary for the levy of excise duty? - Held that: - It is settled that to hold the product as excisable/dutiable, actual marketing/sale of goods is not necessary. What is required to be proved is that the capability of marketing the product. Marketability is decisive test for dutiability. Whether the goods are, in fact, marketed or not is of no relevance. It is also not necessary that goods in question should be generally available in the market. Even if the goods are available from only one source or from a specified market, makes no difference so long as they are available for purchasers. The assessee manufactures agarbathi perfumes (odoriferous compound) by mixing inputs, aromati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise, Bangalore-III, issued show-cause notices calling upon the respondent to pay excise duty along with penalty and interest at the appropriate rates under Sections 11A, 11AB and 11AC of the Central Excise Act, 1944 (for short the Act ) for the period 2001-2002 to 2006-2007. These notices were contested by the respondent. The Additional Commissioner passed orders holding that the Board s circular dated 22.11.1999 is not applicable to the respondent and hence the respondent is liable to pay excise duty, penalty and interest thereon in respect of odoriferous substance prepared by it. These orders were confirmed by the appellate authority in the appeals filed by the respondent. The respondent challenged the said orders before the CESTAT, South Zonal Bench, Bangalore. The CESTAT has allowed the appeals and set aside the said orders to the extent they uphold the demand of duty, interest thereon and the penalty imposed on the appellant for which there was no evidence of sale. The Revenue has challenged the legality and correctness of the said orders in these appeals. 4. Appearing for the Revenue, Sri P.S. Narasimha, learned Additional Solicitor General, submits that the rate of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isability of Odoriferoous compound/Agarbathi mix arising during the course of manufacture of Agarbathi Regarding. It has been brought to the notice of the Board that field formations are demanding duty on the compound preparation arising during the course of manufacture of Agarbathi classifying them under Heading 3302.90 of the Central Excise Tariff as odoriferous compound. 2. The matter has been examined in the Board. The Agarbathi manufacturing process involves simple mixing of a few aromatic chemicals with a base oil in a container in liquid form which is mixed directly with the dough or applied on Agarbathi in the required proportion and such dough, mixed with the aromatic compound; is used for rolling of Agarbathi. The Agarbathi manufacturers normally carry out the whole process in a continuous manner in the course of manufacture of Agarbathi. 3. Moreover, each brand of Agarbathi has a different fragrance which is on account of the different formulation used by the manufacturers which is specific to that particular brand. Preparation of such odoriferous compound, substances applied on the Agarbathi varies from one Agarbathi manufacturer to another. Such pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /dough in a continuous process of manufacture and not to the manufacture of odoriferous perfume, which is in liquid form and transported/stored in barrels/drums. The said circular cannot be made applicable to cases beyond its scope. The circular cannot be equated with that of an exemption notification but is required to be read within the limited scope of its context in which it was issued. The circular did not give exemption to products which are otherwise dutiable. The circular clarifying certain doubts cannot give effect of an exemption notification. Therefore, it cannot be said that the agarbathi compound manufactured by the respondent is covered under the aforesaid circular. 11. The next question for consideration is whether actual marketing of the perfumery compound manufactured by the respondent is necessary for the levy of excise duty. It is settled that to hold the product as excisable/dutiable, actual marketing/sale of goods is not necessary. What is required to be proved is that the capability of marketing the product. Marketability is decisive test for dutiability. Whether the goods are, in fact, marketed or not is of no relevance. It is also not necessary that goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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