M/S. Sanghvi Woods Pvt. Ltd vs Commissioner Of Central Excise

[Arising out of Order-in-Appeal No. 30/CE/APPL/CHD-II(J&K)2010 dated 11.02.2010 passed by the Commissioner of Central Excise (Appeals), Chandigarh].

For approval and signature:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Shri B. Ravichandran, Member (Technical)

1 Whether Press Reporters may be allowed to see 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 of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

M/s. Sanghvi Woods Pvt. Ltd. Appellants

Vs.

Commissioner of Central Excise Respondent

Chandigarh

Appearance:

Shri D B Shroff Sr.Advocate with Shri Simranjeet Singh, Advocate for the Appellants

Shri R K Grover, DR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Hon'ble Mr. B Ravichandran, Member (Technical)

Date of Hearing /decision: 19.08.2015

FINAL ORDER NO. 52737 /2015-EX(DB)

Per Ashok Jindal:

The appellant is in appeal against the impugned order demanding duty on mixture of graphite and clay being intermediate product manufactured by them for manufacturing pencil lead.

2. The facts of case are that the appellant is engaged in the manufacture of stiff paints, NC Lacquer N C Clear Lacquer and pencil lead. Till 2006, the appellants were paying duty on mixture of graphite and clay used in the manufacture of pencil lead. Thereafter, they stopped paying duty thereon as pencil lead attracts nil rate of duty. During the course of manufacture of pencil lead, the appellant is having manufactured a mixture of graphite and clay and this mixture of graphite and clay is an intermediate product. The contention of the Revenue is that this mixture of graphite and clay is excisable under Chapter 68 and appellant is not entitled for benefit of Notification No. 67/95 being intermediate product as their final product is exempted from payment of duty. Therefore, Revenue is of the view that appellant is liable to pay duty on mixture of graphite and clay. In these set of facts, proceedings were initiated against the appellant by issuance of show cause notice which was converted into the impugned order. Aggrieved from the said order, appellant is before us.

3. Shri D B Shroff, Senior Advocate, learned Counsel for the appellant appeared before us and submits that the issue is squarely covered by the decision of this Tribunal in the case of Umesh Pencil Processors Pvt. Ltd. [2011 (267) ELT 0074 (Tri-Chennai)] which has been affirmed by Honble Apex Court reported in [2011 (267) ELT A 23 (SC)]. Therefore, the issue is no more res integra, hence, the impugned order be set aside.

4. On the other hand, learned AR reiterated the finding of the impugned order and submits that this intermediate product is marketable.

5. Heard the parties. Considered the submissions.

6. The contention of the learned Counsel for the appellant is that mixture of graphite and clay is not marketable. Hence, they are not liable to pay duty. The said issue has been examined by this Tribunal in the case of Umesh Pencil Processors Pvt. Ltd. (supra) wherein this Tribunal has held has under:

5.?After hearing both sides, and on perusal of the records, it is revealed from the order of the Commissioner (Appeals) that the mixture of graphite and clay is not bought or sold in the market. The ld. Advocate submits that this mixture has a short life and used captively in the manufacture of pencil lead which attracts Nil rate of duty. The Commissioner (Appeals) observed that the appellant availed the exemption notification and, therefore, it will be treated as excisable goods. In this context, the ld. Advocate contended that, inadvertently, they availed exemption notification and thereafter they contested the excisability of the goods. It is well settled that no product is goods unless shown to be marketable by the department. In the case of United Phosphorous Ltd. (supra), the Honble Supreme Court observed that mere specification in the Dictionary, Excise Tariff and Drawback Schedule is of no consequence. The relevant portion of the decision of the Honble Supreme Court in the case of United Phosphorus Ltd. is reproduced below :-

4.?In the case at hand the Collector (Appeals) has found that the above said three intermediate products came into existence at a certain stage of a multiple stage integrated chemical process leading to the final products and therefore they could not be held to be goods as understood in commercial parlance because they were not marketable. The department had failed in showing if any facility existed for separation of the said three products and whether in the form in which the said three products came into existence in the reaction process were capable of being marketed. The finding of fact so arrived at has not been challenged much less dislodged before the Tribunal. The only argument advanced before the Tribunal was that the three items were mentioned as goods in the dictionary and in the excise tariff and Mercuric Acetate (MA) was also mentioned as one of the items entitled to drawback in Duty Drawback Rules. The Tribunal has observed that these facts and mere mentioning of an item in Drawback Rules with reference to a different context was not enough to satisfy the test of marketability unless it was shown that the intermediate products were capable of being taken to market and bought and sold.

6.?We have noticed that the Tribunal in the case of Camlin Ltd. (supra) rejected the appeal filed by the Revenue on the same goods as there is no evidence whatsoever that the mixture of graphite and clay is at all marketable. We find that, in the present case, both the authorities below accepted the position that the mixture of graphite and clay cannot be bought or sold. The department failed to produce any evidence that the goods are marketable.

7. The said view has been affirmed by the Honble Apex Court (cited supra). As it has been held that mixture of graphite and clay is not marketable, therefore, same is not excisable. In view of this, we do not find any merit in the impugned order, same is set aside. Appeal is allowed with consequential relief, if any.

(Dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

( B Ravichandran )

Member(Technical)

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