http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

PETITIONER: ION EXCHANGE (INDIA) LTD.

       Vs.

RESPONDENT: COLLECTOR OF CENTRAL EXCISE, BARODA.

DATE OF JUDGMENT:       02/08/1999

BENCH: K. VENKATASWAMI. & M.JAGANNADHA RAO,J.

JUDGMENT:

M. JAGANNADHA RAO, J. ---------------------

             The appellant in these two appeals is the same          and the issues arising in both appeals are also the          same.   Civil  Appeal  No.  2110 of 1988  is  filed          against  the  order  of   the  CEGAT(Delhi)   dated          2.2.1988  while  Civil Appeal No.  2006 of 1997  is          filed  against the order of the CEGAT(Delhi)  dated          27.2.   1992.   In Civil Appeal No.  2110 of  1988,          the facts are as follows:

             The  appellant manufactures Ion-Exchanges  and          an  intermediate  product called D.V.B.   beads  is          consumed  in  the course of the manufacture of  the          Ion Exchanges.

             The dispute was confined to the question as to          whether   excise   duty  was    leviable   on   the          intermediate  product.   Three points arose  before          the  CEGAT.   The first was in relation to  whether          the  said  intermediate products were  goods  which          were  marketable, the second was whether they  fell          within  the  classification in the relevant  tariff          item  No.15A(1)(ii)  and  the   third  related   to          limitation.   On  the  third point, all  the  three          members  were agreed that the demand for duty could          not  exceed  six  months preceding the  show  cause          notice.   But on the first and second points  there          was  difference of opinion.  One of the members Sri          V.P.Gulati  held  that  the   disputed  goods  were          distinct  items as compared to the end product  and          that  they  were marketable goods inasmuch  as  the          affidavits  produced  by  the   appellant  to   the          contrary  were  not acceptable.  He also held  that          unless  the goods were proved by the Revenue to  be          plastic  materials  or  resins, they could  not  be          brought  under item no.  15A(1)(ii) and the  matter          required a remand to the Collector(Appeals) on that          question.   The other two members (Sri S.D.Jha  and          Sri  Harish  Chander) observed that they  had  some          reservations  as  to the evidence produced  by  the          appellant   to  prove  that   the  beads  were  not          marketable.  On the question of marketability, they          held  that  once  these  beads fell  in  the  entry          15A(1)(ii),  their marketability was to be  treated

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

        as   no  longer  in  question.    As  to   the   OA          classification,  they felt no remand was necessary.          The intermediate product squarely fell within entry          15A(1)(ii).   They  therefore dismissed the  appeal          subject  however  to the slight modification as  to          the  period of limitation on which point they  were          in  agreement  with  Sri V.P.Gulati.   Against  the          dismissal  of  the appeal in the manner  as  stated          above, the appellant has preferred this appeal.

             In the connected Civil Appeal No.2006 of 1997,          the  position  was  that  the  appellant  contended          before the CEGAT that tariff item No.15A(1)(ii) was          not  applicable  and also that the first  appellate          authority  had  not gone into the marketability  of          the  intermediate product as the said authority did          not  notice the evidence produced by the appellant.          Even  so, the Tribunal felt that its judgment dated          2.2.1988 (which is under appeal in Civil Appeal No.          2110  of  1988) was in point and covered  the  case          against  the appellant.  (No question of limitation          arose  in this case).  Following that judgment, the          appeal was dismissed.

             In these appeals, we  have          heard  the learned senior counsel for the appellant          Sri  Joseph Vellapally and the learned counsel  for          the  department, Sri M.Gaurishankar Murthy.

             We  are  of  the opinion that in view  of  the          judgments  of  this  Court in Moti  Laminates  Pvt.          Ltd.   & Others versus Collector of Central Excise,          Ahmedabad  [1995  (3)  SCC 23] which has  been  re-          affirmed  in Union of India & Another versus  Delhi          Cloth  &  General Mills co.  Ltd.  & Another  [1997          (5) SCC 767], the reasoning of the majority Members          that  specification  in  the  tariff  is  proof  of          marketability, cannot be accepted.  The evidence as          to  marketability that the Revenue may produce  is,          in  our  opinion,  to be separately  gone  into  in          conjunction with other evidence that is produced by          the assessee.  In the present case, the two members          who have gone merely by the specification, have not          gone  into the evidence produced by the parties  on          the  question  of  marketability.   Hence  on  that          question,  the  matter  has to be remitted  to  the          Tribunal.   On  the  other   question  relating  to          whether  the intermediate product falls within  the          tariff  item 15A(1)(ii) or not, one of the  members          has  directed a remand while the reasoning given by          the  other  two members is rather cryptic  and  not          elaborate.   We, therefore, think that even on this          point  as  to whether the beads fall within  tariff          entry  15A(1)(ii), the matters have to be  remitted          to the Tribunal.

             We,  accordingly,  set aside the judgments  of          the Tribunal in both cases and remit the matters to          the   Tribunal   both  on   the  question   as   to          marketability of the intermediate products and also          on  the  question whether they fall  within  tariff          item  15A(1)(ii).   So  far  as  the  question   of          limitation  in  Civil Appeal No.  2110 of  1988  is          concerned, the unanimous finding of the CEGAT shall

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

        stand confirmed.  The appeals are allowed as stated          above.  There will be no order as to costs.