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CASE NO.: Appeal (civil)  2155 of 2002

PETITIONER: White Machines

RESPONDENT: Commissioner of Central Excise, Delhi

DATE OF JUDGMENT: 21/02/2008

BENCH: ASHOK BHAN & DALVEER BHANDARI

JUDGMENT: JUDGMENT O R D E R CIVIL APPEAL NO. 2155 OF 2002

       Assessee-appellant (hereinafter referred to as ’the ’assessee’) claimed the C.I.Chil led Rolls  being manufactured by the appellant under chapter heading 84.37 which in turn is exempted  from the payment of excise duty vide exemption Notification No.56/95-CE dated 16.3.1995.           A show cause notice dated 27th September, 1996 was issued to the assessee alleging t hat the  assessee first manufactures C.I.castings which are later on captively consumed for producing   the C.I.Chilled Rolls; that since the assessee was producing intermediary product, it was li able  to pay the excise duty on the C.I.castings under chapter heading 7207.10.           Assessee in reply to the show cause notice had taken the point that C.I.castings whi ch are  intermediary product were not marketable and, therefore, excise duty could not be levied.   According to the assessee, C.I.castings are in the process of manufacturing C.I.Chilled Roll s. CIVIL APPEAL NO.2155 OF 2002                         -2-         The adjudicating authority in its order dated 29.1.1999 recorded a finding to the fo llowing  effect:

"Both the circulars issued by Board as mentioned above do not speak  anything about marketability of castings and as such marketability of  castings have got no bearing on the classification of the product.  Even  otherwise the castings manufactured by the market are capable of  being sold in the market."

       Assessee, being aggrieved, filed appeal before the appellate authority.  Appellate a uthority  in its order dated 20th February, 2001 reiterated the finding recorded by the adjudicating  authority and held that:

"I also observe that the appellants in para 3.1 of their grounds of  appeal have stated that these castings were sold to the customers who  placed orders for the same and not in the open market. Even where the  goods are manufactured as per the specifications and the requirements  of a customer, the same satisfy the criteria of the marketability."

       The Tribunal has not recorded any finding regarding marketability of the intermediar y  product i.e. C.I.castings.  Counsel appearing for the assessee very fairly concedes that if  the

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intermediary product is marketable, then the excise duty would be payable because the final  product i.e. C.I.Chilled Rolls is  

CIVIL APPEAL NO.2155 OF 2002                         -3- exempted from payment of excise duty. Since, there is no finding recorded by the Tribunal  regarding marketability, excise duty could not be levied on the intermediary product i.e.  C.I.castings.  Counsel for the assessee relied upon a number of judgments to contend that  unless the intermediary product is marketable, excise duty could not be levied. (cases refer red:  Union Carbide India Ltd. vs. Union of India & Others reported in (1986) 2 SCC 547; Gujarat  Narmada Valley Fertilizer Co. Ltd. vs. Collector of Excise & Customs reported in (2005) 7 SC C  94).         In the absence of any finding recorded by the Tribunal regarding marketability, we a re  handicapped and cannot proceed with the case any further.  Accordingly, we accept this  appeal; set aside the impugned order of the Tribunal and remit the case to the Tribunal for  passing a fresh order in accordance with law including the point regarding marketability of  the intermediary product i.e. C.I.castings.  All contentions are left open.