- (1.) The question in this appeal is whether the intermediate chemicals which are formed in the process of manufacture of Butachlor are liable tax under the Central Excise and Salt Act, 1944 (referred to as the Act). The two chemicals in question are Diethyl Chloro acetanilide (DECA) and Chloro Mehtyl Butyl ether (CMBE).
(2.) The period in question is 1989 to 1991. During this period of time, Butachlor was exempted from payment of excise duty. However, a demand was raised by the Assistant collector (Excise) on the appellant in respect of the intermediate products because they were 'coming into existence". The demand, however, was set aside by the Commissioner (Appeals) who was of the view that the Assistant collector had not come to any finding whether the products in question could be treated as marketable. It was held that there was no factual basis whatsoever on the basis of which the assistant Collector could have reached the conclusion that the products were marketable and unless the goods were marketable, they were not subject to excise duty. It was, therefore, held that reading Section 2 (F) with Section 3 cf the Act, the products in question were not marketable only because it happened to be mentioned in Chapter Note l (a) to Chapter 29 of the Central Excise Tariff Act, 1985.
(3.) The Customs, Excise and Gold (Control) appellate Tribunal (CEGAT) , however, reversed the order of the Collector holding that the goods were stable and therefore marketable. It was noted that the appellant had not brought any technical data or chemical report in support of the appellant's contention that the products were unstable or were in unfinished form. On the other hand, the department had brought on record the test report of a Chemical examiner, according to which both the products deca and CMBE were organic chemicals. It was said that since the sample was tested, this showed that the products were stable and had adequate shelf life. It was then concluded that once the products were stable it could be brought to the market for sale. This, according to CEGAT, fulfilled the test of marketability as required by this Court in several decisions. It was also held that the mere fact that the entire quantity of DECA and CMBE was consumed by the appellant in the manufacture of butachlor did not affect the question of marketability and that "if similar technique is adopted by any other manufacturer the product in question can be bought and sold". CEGAT also relied upon a letter written by M/s. Gharda chemicals produced by the appellant. Finally the Tribunal said that since the appellant had given production figures of the two intermediate products on the basis of actuals and not on theoretical basis, this showed that the product was marketable.;