Commissioner Of Central Excise, Raigad vs Mohan Rocky Spring Water Breweries Ltd

(Arising out of Order-in-Appeal No. AT/RGD/436/2005 dated 29.8.2005 passed by Commissioner of Central Excise (Appeals), Mumbai-II)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) and Honble Mr. S.S. Garg, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :

CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Commissioner of Central Excise, Raigad Appellant Vs. Mohan Rocky Spring Water Breweries Ltd. Respondent

Appearance:

Shri Ashutosh Nath, Assistant Commissioner (AR), for appellant Shri S.N. Kantawala, Advocate, for respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing: 22.9.2015 Date of Decision: 29.9.2015

ORDER NO

Per: P.K. Jain

This is an appeal filed by the Revenue against the order passed by the Commissioner (Appeals).

2. Brief facts of the case are that the respondent-assessee is manufacturer of beer. During the manufacture of beer, an intermediate product wort comes into existence and this product is captively consumed by the respondent-assessee. The case of the Revenue is that the respondent-assessee is required to pay the duty on the item wort. The case was adjudicated by the original authority who dropped the demand. Aggrieved by the said order, the Revenue filed appeal before the Commissioner (Appeals) who dropped the demand/confirmed the order of the original authority. Against the said order of the Commissioner (Appeals), the Revenue is in appeal before this Tribunal.

3. Learned AR submitted that the item wort is chargeable to duty and in support of his contention, he submitted the judgment of the Honble Supreme Court in the case of Escorts Ltd. vs. CCE, Faridabad reported in 2015 (319) ELT 406 (SC). Learned AR submitted that it is not necessary that the intermediate product should be marketed as such. Hence the fact that the item has got limited shelf life is of no consequence. Learned AR also submitted the judgment of the Honble Madras High Court in the case of Mettur Thermal Power Station vs. CBEC reported in 2015-TIOL-1948-HC-MAD-CX.

4. Learned counsel for the respondent-assessee submitted that this Tribunal in their own case for the earlier period, reported in 2003 (158) ELT 171 (Tri.-Mum.) held in favour of the assessee. It was further submitted that no new grounds have been made in the appeal and in fact the Commissioner (Appeals) has dropped the demand keeping in view the direction of the Tribunal. He further submitted that the said order of the Tribunal has been accepted by the department and no appeal has been filed against the said order of the Tribunal. He further submitted that the decision of the Honble Supreme Court in the case of Escorts Ltd. is altogether on different facts. There the issue involved was the dutiability on transmission assemblies of tractors and even the Tribunal has held that the same will be dutiable. In their case there is no evidence whatsoever that the item wort is marketable or is marketed anywhere. He further submitted that similarly the decision of the Honble Madras High Court is relating to fly ash and fly ash bricks which are different products and the question of marketability and excisability has to be decided in the facts and circumstances of each case and there can be no uniformity and a case law for one item cannot be made applicable to other item.

5. We have considered the submissions of both the sides. We find that this Tribunal in the respondent-assessees own case reported in 2003 (158) ELT 171 (Tri.-Mum.) has observed as under:-

2. After?hearing both sides and considering the material on record it is found -

(a) The WORT is an intermediate product. The show cause notices issued in both these cases, do not bring out any material to indicate how the intermediate product WORT is marketable. It is now well settled that for levy of duty under the Central Excise Act, 1944 on an intermediate product, establishing its marketability is essential. The Apex Court in the case of Cadila Laboratories Pvt. Ltd., v. CCE, Vadodara [2003 (152) E.L.T. 262 (S.C.)] had held that the burden of proof of marketability of an intermediate product, is to be discharged by the Department. Orders passed on the basis that the subject goods conceivably sold cannot be sustained as in the present case.

(b) It is found that the Commissioner has found as regards the salability as follows :

As per salability of the WORT, I find that assessee have claimed that WORT is not liable to duty since the same is not a saleable product. In this regard I find that, merely because the assessee have consumed the product in question captively and are not selling, will not turn the same into non-marketable product. I find that the word marketability only enshrined capable of being bought and sold [Indian Cable Co. Ltd., v. CCE, Calcutta - 1994 (74) E.L.T. 22 (S.C.)]. The law on the levy of duty on intermediate goods captively consumed has been well settled since the case of UOI v. Delhi Cloth & General Mills Co. Ltd. [1977 (1) E.L.T. (J 199) (S.C.)] by a Constitutional Bench, wherein it has been held.

17. These definitions make it clear that to become goods an article must be something which can ordinarily come to the market to be bought and sold by merchants and traders. This binding decision has been followed by the Supreme Court in a series of decisions, including the decision in the case of Indian Cable Company Ltd. [1994 (74) E.L.T. 22 (S.C.)], relied upon by the adjudicator. In this case a full Bench had held marketability is a decisive test for dutiability. It only means salability or suitable for sale. It need not be in fact marketed. The article should be capable of being sold or been sold to consumers in the market as it is i.e. without anything more. Thereafter observing in the facts of the Indian Cable Company case that the Tribunal was swayed by the fact that conversion of PVC resin into PVC compound by the process employed by the appellants amounted to manufacture, within the meaning of Section 2(f) of the Act by itself will justify the levy of duty was a impalpable error committed by the Tribunal and the matter was remanded back to the Tribunal to consider the appeal afresh. In the cases before us, in absence of any material in the show cause notice to accept the marketability or salability of the product, the matter cannot be remitted back to the learned adjudicator for redetermining the question of marketability, since he had no material to conclude on salability, as arrived at, it could be only an assumption. The onus of proving marketability cannot be discharged.

(c) The submissions have been made that under the control of Brewery Officer of State Excise, the goods in question could not be marketed. In this connection, we would like to follow the decision of the Delhi High Court Division Bench in the case of Delhi Cloth and General Mills Ltd. and Ors. [1977 (1) E.L.T. (J 199)] wherein the Court after considering the fact that excisability of goods is often regulated by law and unless the relevant rules are complied with, the goods could not be exchanged and that may be an additional reason, why WORT may not be goods. In the facts of that case, the marketability of calcium carbide was not upheld since Chapter III of Carbide of Calcium Rules, 1937, made under the Act, 1934, prohibited the transport of Calcium carbide, its storage, its delivery or discharge and its sale, except after complying with the directions prescribed thereunder. And since those conditions were not complied with they held that the Calcium carbide in that case was not goods. In this case also the plea has been made, before us that controls prescribed under the Maharashtra State enactments viz., manufacture of Beer and Wine Rules, 1966, where it is mentioned at different rules, the process is in the control of a Brewery Officer/(excise) and no removals of WORT could be effected without his permission. This plea of the appellant was to be dealt with by the Commissioner and a finding arrived at how the goods would still be marketable. The plea, does lead to a conclusion that the tests, prescribed by the Apex Court in Delhi Cloth and General Mills case [1977 (1) E.L.T. (J 199)] of the goods ordinarily coming to the market to be bought and sold by merchants and traders has not been applied by the investigators and the Commissioner to the entity WORTS, no evidence on records points to WORTS passing this test.

(d) Since the order is not being upheld on the ground of lack of evidence of removal and capable of Pragmatic Marketing for WORTS to become goods in the facts of these cases, the question on the other aspect of its classification under the heading as proposed cannot arise, since it is goods that are to be classified under the Tariff. Once the entity is not held to be excisable goods as per Apex Court decisions, classification thereof is not called for.

(e) In view of our findings, the order is required to be set aside and appeals allowed.

6. We do not find any grounds or any evidence brought forward by the Revenue against the above findings of the Tribunal. In the absence of any such evidence, we respectfully follow the earlier order of this Tribunal and the appeal filed by the Revenue is dismissed.

(Pronounced in Court on 29.9.2015)

(S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical)

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